There are currently no indications of interest from any parties to acquire Balaan, which has filed for corporate rehabilitation due to a liquidity crisis.
Choi Hyung-rok, CEO of Balaan, met with reporters after attending a representative hearing for the corporate rehabilitation application at the Seoul Rehabilitation Court in Seocho District on the afternoon of the 3rd, saying, “We are tapping a lot behind the scenes regarding (M&A), but there is nothing definite.” CEO Choi formalized the corporate rehabilitation process application on the 31st of last month and noted that M&A would be conducted concurrently.
At that time, CEO Choi stated that they would designate a sale management company within this week to begin execution in earnest, but it appears that no significant progress has been made yet.
During the hearing, which lasted about 40 minutes starting at 2 p.m. that day, CEO Choi submitted a 40-page hearing document and explained the circumstances and plans for the rehabilitation. He mentioned that the reason for the rehabilitation application was 'investment failure.'
CEO Choi said, “We planned and communicated about the second investment from SILICON2, but that fell through.” He added, “I thought that if the second investment portion (7.5 billion won) came in, everything would be solved. Therefore, I spent a lot of time on that, but I realized that it was practically impossible within the timeframe, so we sought consent from SILICON2 and applied for the rehabilitation process.”
Earlier, SILICON2 signed a mezzanine investment contract worth a total of 15 billion won with Balaan at the beginning of last month. This involves acquiring 15 billion won of convertible bonds (CB) issued by Balaan in two separate installments of 7.5 billion won each. SILICON2 has already deposited 7.5 billion won.
The second investment will proceed conditionally. Conditions were set that during the period from November 1 to May 1, 2026, the proportion of continuous purchase and sales revenue for the previous two months must be over 50%, and continuous operating profit must be achieved for the previous two months.
CEO Choi stated, “Balaan does not have many creditors other than trade receivables, and its expenses and scale are much smaller compared to Temeen (Timon + Wemaep),” and added, “I thought that rehabilitation was very important to ensure equal repayment for creditors and to enter negotiations quickly.”
He continued, “Since the preservation order has been issued, I think we will meet with the sellers from tomorrow or next week,” adding, “I understand that the sellers also want a quick repayment possibility for their debts and normalizing sales.”
At the same time, CEO Choi said that the decision to apply for rehabilitation was made last weekend. He stated, “I was already aware that there is no management rights situation, but this investment was to uphold responsibility and promises,” and added, “Since we promptly ceased payments, there have been no customer damages, and we will prioritize the repayment plan for trade creditors and work on normalization quickly.”
As of the end of 2023, CEO Choi's equity in Balaan is 37.63%, but it is expected to have been diluted due to large-scale investments.
Previously, Balaan experienced a liquidity crisis after failing to pay settlement funds to some of its partner companies last month. Balaan's average monthly transaction volume is reported to be around 30 billion won. The total number of partner companies is estimated to be more than 1,300. Following the news of Balaan's corporate rehabilitation filing, some partner companies filed criminal complaints against CEO Choi Hyung-rok and several executives for embezzlement.