[비즈한국] It has been confirmed that Sajo Dong-A One has initiated an arbitrary auction on a residence located in Gahoe-dong, Jongno-gu, Seoul, owned by former Dong-A One Group Chairman Lee Hee-sang. As the former owner of the original Dong-A One, Lee sold the company to Sajo Group in 2016 and is officially unaffiliated with Sajo Dong-A One. However, it appears that financial transactions continued even after the sale. According to the real estate register, a mortgage with a maximum bond amount of 2.5 billion won was established on Lee’s Gahoe-dong residence in September 2022, with Sajo Dong-A One as the creditor.
On August 12 of this year, it was confirmed that the Gahoe-dong residence was provisionally seized at the request of Sajo Dong-A One. Provisional seizure is a legal mechanism to prevent a debtor from disposing of their assets by preemptively freezing them to ensure the enforcement of a debt. Subsequently, on August 21, the court decided to commence an arbitrary auction of the Gahoe-dong residence, also at the request of the creditor, Sajo Dong-A One.
This indicates that former Chairman Lee Hee-sang borrowed funds from Sajo Dong-A One and provided his Gahoe-dong residence as collateral, and the property was put up for auction due to his failure to repay the loan. BizHankook reached out to Sajo Dong-A One for comment regarding this matter but did not receive a response.
Questions also arise regarding why Sajo Dong-A One lent funds to former Chairman Lee Hee-sang in the first place. At the time the mortgage was established in 2022, there was no equity relationship between Sajo Dong-A One and Lee. Furthermore, Sajo Group Chairman Joo Jin-woo and Vice Chairman Joo Ji-hong are listed as directors at Sajo Dong-A One. There does not appear to be any special reason or personal connection to warrant such consideration for the former chairman.
The amount Sajo Dong-A One is claiming from former Chairman Lee Hee-sang is 1.5 billion won. While Lee’s exact net worth has never been publicly disclosed, there has been much speculation that he possesses significant assets, given his background as a conglomerate figure and his status as an in-law of the late Chun Doo-hwan. Yet, he now faces the prospect of losing his home to auction over a 1.5 billion won debt.
The only confirmed asset of former Chairman Lee Hee-sang is a 48.95% stake in Daesan & Company. As Daesan & Company is unlisted, it is difficult to determine its exact value. As of the end of last year, its financial structure appeared sound with 24.3 billion won in total assets and 6.6 billion won in total liabilities. However, its business performance is limited, with roughly 900 million won in revenue and a 600 million won operating loss recorded last year.
Sajo Dong-A One is a Sajo Group affiliate that produces and sells flour products and compound feed for livestock and aquaculture. It maintains stable performance, recording 323.9 billion won in revenue and 10.9 billion won in operating profit in the first half of this year. As of the end of June, its total assets stood at 470.5 billion won. Even if the 1.5 billion won is recovered from former Chairman Lee Hee-sang, it is unlikely to have a significant impact on the company's financial status.