New Leap Fund to Sequentially Purchase 1 Trillion Won in Long-Term Delinquent Bonds Starting End of This Month...Immediate Halt to Debt Collection

Sequential Purchases Begin at the End of This Month, Procedures to Be Completed by Late July
Debts of Socially Vulnerable Groups Such as Basic Livelihood Security Recipients to Be Immediately Written Off
Approximately 108,000 People Expected to Be Relieved of Overdue Interest and Collection Pressure

Starting at the end of this month, the New Leap Fund will sequentially purchase 1.0314 trillion won in long-term delinquent bonds held by four companies, including Sangnoksoo and KB Star. As soon as the bonds are purchased, debt collection will be halted, and the debts of socially vulnerable groups, such as recipients of basic livelihood security, will be written off without a separate assessment of repayment ability. As a result, approximately 108,000 people are expected to be freed from the burden of overdue interest and debt collection.

On October 1st, the 'New Leap Fund Launch Ceremony' was held at the Press Center in Jung-gu, Seoul. Eokwon Lee, Chairman of the Financial Services Commission, delivered a congratulatory speech at the ceremony. 2025.10.01 Photo by Dongjoo Yoon

The Financial Services Commission announced on the 28th that, on the 26th, Executive Secretary Shin Jinchang presided over the “Review Meeting on the Results of the Negotiations for the Purchase of Bonds by Securitization Companies for the New Leap Fund,” attended by the Financial Supervisory Service, Korea Asset Management Corporation (KAMCO), and investors from nine major securitization companies. During the meeting, these matters were discussed. This meeting was held as a follow-up to the long-term delinquent bond resolution plan for Sangnoksoo announced in May.

A comprehensive review of securitization companies in the financial sector that are currently holding, investing in, or managing such assets found that a total of 167 securitization companies hold individual unsecured delinquent bonds as underlying assets, with a total balance of 5.9804 trillion won. Among them, 46 companies hold 1.0572 trillion won (about 113,000 people) in individual unsecured bonds that have been delinquent for seven years or more and are under 50 million won, making them eligible for support from the New Leap Fund.

In particular, the top three companies—Sangnoksoo (723.5 billion won), KB Star (281.7 billion won), and Genesis (25.8 billion won)—were found to hold the majority of the eligible bonds, totaling 1.031 trillion won.

KAMCO has completed negotiations to purchase a total of 1.0314 trillion won in bonds from 45 out of the 46 companies holding eligible bonds, excluding Genesis. Accordingly, the Financial Services Commission plans to purchase 1.0056 trillion won in bonds held by four companies, including Sangnoksoo and KB Star, by the end of this month, and to complete the purchase of the remaining 25.8 billion won in bonds held by the other 41 companies by the end of July.

Once the bonds are transferred to the New Leap Fund, debt collection will be halted immediately. For socially vulnerable groups—such as recipients of basic livelihood security, persons with disabilities receiving disability pensions, and veterans receiving livelihood adjustment or support allowances—debts will be written off without a separate assessment of repayment ability.

Other debtors will be assessed for their repayment capacity. If they are deemed to have lost their repayment ability to a level comparable to personal bankruptcy, their debts will be written off within one year. If their repayment ability is found to be severely lacking, debt adjustment support will be provided.

The Financial Services Commission expects that, through this purchase, about 108,000 people will be able to escape the burden of debt collection and overdue interest and resume normal economic activities.

In addition, the commission plans to continue negotiations on the purchase of bonds with Genesis, which has not yet reached an agreement. In the case of Sangnoksoo, which was established during the 2003 credit card crisis and has managed long-term delinquent bonds for 23 years, it will sell approximately 130 billion won in remaining non-eligible bonds to KAMCO and then proceed with liquidation procedures.

The Financial Services Commission also announced plans to strengthen the management and supervision of the NPL (non-performing loan) securitization market. The commission stated that, as the securitization market could become overheated depending on money market conditions and, when non-performing loans are used as underlying assets, there is a risk of rising NPL prices and excessive collection, it will closely monitor market trends and consider institutional improvements as necessary.

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