Court Approves Compulsory Authorization of Dong Sung Pharmaceuticals' Rehabilitation Plan

"The Rehabilitation Plan Meets All Statutory Requirements for Court Approval"

The court has approved the compulsory authorization of Dong Sung Pharmaceuticals' rehabilitation plan, which had previously been rejected.

On March 27, the 11th Civil Division of the Seoul Bankruptcy Court (Presiding Judge Park Soyoung) announced that it had granted authorization for Dong Sung Pharmaceuticals' rehabilitation plan, which includes provisions for creditor protection.

Previously, at the stakeholders’ meeting held on March 18, Dong Sung Pharmaceuticals’ rehabilitation plan satisfied the approval requirements among secured creditors (99.97%) and shareholders (52.76%), but failed to obtain the required two-thirds consent among unsecured creditors, with only 63.15% in favor. As a result, the plan was rejected.

In response, the joint administrators applied to the court the following day for compulsory authorization of the plan with creditor protection provisions. Compulsory authorization is a system whereby the court can authorize a rehabilitation plan ex officio, even if some groups do not reach the required consent threshold, by including provisions to protect the rights of those groups.

The court cited as its reason for approval that the rehabilitation plan met all statutory requirements. It also stated that both secured creditors and most unsecured creditors would benefit more from repayment under the rehabilitation plan than from liquidation and distribution through bankruptcy proceedings.

Additionally, the court pointed to the following reasons for approval: ▲ the total approval rate, combining secured and unsecured creditors, reached 93.97% of total voting rights; ▲ the acquisition funds would be used to fully repay the principal and pre-commencement interest on rehabilitation claims; ▲ most post-commencement interest would also be repaid, ensuring that creditor rights are sufficiently protected.

With this approval, the consortium of United Asset Management Company (UAMCO) and Taekwang Industrial will inject a total of 160 billion won as acquisition and normalization funds. Of this, 70 billion won will be used for new share subscriptions and 90 billion won for purchasing corporate bonds. Based on these funds, Dong Sung Pharmaceuticals will be able to repay its debts in a lump sum.

The effects of the rehabilitation plan take effect immediately. If the repayment commences and the court determines there are no obstacles to implementation, it will issue a decision to end the rehabilitation proceedings. Once the proceedings are concluded, Dong Sung Pharmaceuticals will regain normal management authority and exit from the administrator system.

This content was produced with the assistance of AI translation services.