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DR & AJU successfully performs the restructuring M&A for Resort A 2019-04-24

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Resort A, also well known as a filming site for popular dramas, started restructuring procedures in 2007 due to its financial situation and paved the way for its comeback after achieving successful M&A based on the assistance from consultants including DR & AJU. Resort A was in a chaotic state due to its financial difficulties and the arrest of the management for fraudulent loans; the Resort received a decision to commence the restructuring procedures from the Daejeon District Court on April 3, 2017, and commenced its restructuring procedure. DR & AJU along with an accounting firm B offered consultation to the M&A sales of Resort A.   

The consultants for the sale advised that a M&A is the only solution for the rehabilitation of Resort A and persuaded the court and Resort A to utilize the Stalking Horse Bid to maximize the possibility and price of the sales. The court accepted the opinion of the consultants and allowed M&A prior to authorization in the method of a Stalking Horse Bid.

During the M&A procedure, Company C executed a conditional takeover contract with Resort A as the Stalking Horse (preliminary purchaser). As there was no other bidder in the public competitive bidding, the conditional takeover contract with Company C was finalized and Company C was finally determined to be the purchaser. Resort A submitted a restructuring proposal where Company C were to invest KRW 250 billion to Resort A through paid-in capital increase with allotment to the third party; KRW 105 billion were planned to be used for paying debts and the remaining balance of KRW 145 billion for investing in its old facilities such as renovation.

While Company C was selected as the purchaser, the biggest issue remained, which was getting the approval from approximately 10,000 member creditors who were having conflicts after splitting into a number of different groups. DR & AJU assisted Resort A in the process through its appropriate and accurate consultation. As a result, the member creditors began to gradually change their position towards approving the restructuring plan. After about 4 months of persuasion and efforts since the submission of the restructuring plan, Resort A obtained the approval from the majority of members and the restructuring plan was approved in the assembly of persons concerned held on August, 2018. The Daejeon District Court made a decision to authorize the restructuring plan on September, 2018 and closed the restructuring procedure on December, 2018.

DR & AJU provided consultation on the interpretation of the relevant law based on its experience during the process of the M&A procedure prior to authorization and the drafting of the restructuring plan. At the same time, DR & AJU, by actively publicizing the restructuring plan and persuading the member creditors together with Resort A, was able to obtain a high approval rate for the submitted restructuring plan. Two years after the authorization of the restructuring plan and the closure of the restructuring procedure, Resort A was able to rehabilitate into a normal enterprise. Afterwards, Resort A changed its company name, resumed construction of a hotel at Jecheon which had been stopped for about 9 years, and began renovation of its old facilities which were almost 20 years old. Resort A is now ready to prosper further. 

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