Concerns have been raised that personal recovery or bankruptcy among small business owners may increase following the approval of TMON's rehabilitation plan. With a repayment rate of only about 0.76%, and that amount needing to be used for repaying bank loans, the liquidity crisis for small businesses is unlikely to be resolved.
According to reports from ChosunBiz on the 9th, small business owners who have partnered with TMON are aligning towards supporting TMON's rehabilitation plan at a creditors' meeting scheduled for the 20th at the Seoul Rehabilitation Court.
As Oasis, which operates the early morning delivery service 'Oasis Market,' has been selected as the acquirer, there is a significant possibility that the court will grant approval despite opposition from approximately 20,000 small business creditors.
The court can grant compulsory approval even if the creditors do not meet the statutory consent requirements, as long as it finds the rehabilitation plan reasonable.
While TMON has found an acquirer, the possibility of continuing operations has increased, but it appears that the damage to small business owners will be difficult to recover. Even if the rehabilitation plan is approved, the repayment rate is limited to 0.76%, making it virtually impossible to recover unliquidated amounts. Unliquidated commercial receivables amount to approximately 745.6 billion won, but the repayment amount under the rehabilitation plan is only about 5.6 billion won.
A small business owner said, "Some agricultural and computer components suppliers have not received settlements of over 10 billion won." They added, "If we assume no settlement of 10 billion won and a repayment rate of 0.76%, I would only receive 76 million won post-approval of the rehabilitation plan," stating, "It’s absurd and disheartening. It’s a situation where we have to accept it with tears in our eyes."
Considering that the typical repayment rate for corporate rehabilitation cases is around 10-20%, the 0.76% figure is abnormally low. TMON has very few assets, such as real estate, and has been in the red for several years, resulting in a lack of cash to put towards debt repayment.
While settlements are not being received properly, bank loans remain, increasing the burden on small business owners. With TMON's settlement cycle being a minimum of 60 days, small businesses have secured cash by taking out bank loans using generated sales (accounts receivable) as collateral.
A banking official noted, "After the TMON and WeMakePrice incidents occurred, we have supported loan term extensions, grace periods for principal and interest repayment, and interest rate reductions," adding, "We are aware that the repayment rate is low, but it's difficult to adjust the principal of loans secured with accounts receivable as collateral."
As a result, there are projections that applications for personal rehabilitation and bankruptcy among small business owners will increase following the approval of the rehabilitation plan.
A member of the TMON sellers' emergency response committee said, "There is a growing possibility of an increase in personal cases among small business owners, and we have requested the new government to establish separate rehabilitation and bankruptcy policies for them," adding, "We hope for at least minimal interest support."