[비즈한국] Ballan, once considered one of Korea's 'top 3 luxury platforms,' has finally entered bankruptcy proceedings. Following the termination of its rehabilitation process and the transition to connected bankruptcy, the order of debt repayment and dividend size have emerged as key areas of concern. Attention is also focused on the fact that the amount recovered by general creditors may vary depending on the remaining assets and the scale of common benefit claims.
The Fall of a Top 3 Luxury Platform
On the 24th, the Seoul Bankruptcy Court declared Ballan bankrupt. Following this declaration, Ballan will end its rehabilitation process and enter liquidation proceedings to repay creditors. It is expected that the dividend scale will be determined after asset disposal and debt investigation procedures are completed.
Launched in 2015, Ballan grew alongside Trenbe and Must-It as one of Korea's 'top 3 luxury platforms.' It quickly gained users by connecting overseas boutiques with parallel import products, and at one point, it held such significant market influence that its annual transaction volume reached 680 billion won. However, as luxury consumption slowed and competition intensified, the company began to struggle with profitability.
Ballan eventually filed for corporate rehabilitation in March of last year. At the time, Ballan CEO Choi Hyung-rok expressed confidence, stating, "Normalization is possible once short-term liquidity issues are resolved," but the rehabilitation process was difficult. The acquisition price offered by the potential buyer, Asia Advisors Korea (AAK), stood at only around 2.2 billion won, resulting in an initial debt repayment rate of just 5%.
Ballan attempted to persuade creditors by proposing a revised plan to increase the repayment rate to 15.5% by securing additional resources through the exercise of avoidance power. However, it was not enough to change the minds of major creditors, including the largest creditor, Silicon2257720. At a meeting of interested parties held on February 5, the approval rate for the rehabilitation plan was only 35%, far below the required 66.7%, and the court announced the termination of Ballan's rehabilitation proceedings on the 6th. Following the subsequent bankruptcy declaration, Ballan is now undergoing liquidation.
Priority Given to Common Benefit Claims, Dividends for General Creditors Uncertain
A notable point in this bankruptcy process is the shift in the order of debt repayment. According to Bizhankook's coverage, on the 20th, Ballan CEO Choi Hyung-rok withdrew various pending permit applications and submitted a petition for connected bankruptcy to the court. Connected bankruptcy refers to a method where a company undergoing rehabilitation proceedings, if it fails to receive approval for a rehabilitation plan or is deemed incapable of continuing as a going concern, switches to bankruptcy proceedings while remaining legally linked to the existing rehabilitation process.
Connected bankruptcy is a standard procedure when transitioning from rehabilitation to bankruptcy. However, Ballan is drawing attention because the structure of priority repayment for common benefit claims could directly affect the size of dividends for general creditors.
When rehabilitation proceedings shift to bankruptcy, debts incurred during the rehabilitation process, known as 'common benefit claims,' become the top priority for repayment. These claims include payments for goods incurred during the operation of the rehabilitation process, court administrative costs, unpaid wages, and taxes. This means that general creditors will only receive dividends if there is money left over after priority items such as wages and taxes are settled.
The larger the scale of common benefit claims, the more likely the amount actually recovered by general creditors will decrease. In particular, as it is reported that Ballan failed to pay employee wages normally after the rehabilitation process began, industry insiders are watching to see how the scale of unpaid wages will affect the dividend structure.
Additionally, concerns are being raised that Ballan may not have sufficient remaining assets. In the bankruptcy declaration, the court specified regarding future proceedings that "in this case, an opinion hearing on bankruptcy termination and a financial report upon the conclusion of the bankruptcy trustee's duties may be conducted." This means that if the value of assets falls short of the procedural costs, a bankruptcy termination process could be considered. If this happens, it is possible that there will be no dividends for general creditors. With the uncertainty surrounding Ballan's asset situation and the direction of the proceedings, the outlook for debt recovery for creditors is becoming increasingly bleak.
Ballan's creditors' meeting and the debt investigation date are scheduled for April 16. The creditors' meeting is expected to discuss major procedural matters, including whether to continue operations and methods for the storage and management of high-value goods.