Global Restructuring Review - Cross-border restructuring and insolvency legal news, features and events

GRR 100 2018


04 May 2018

Pushing a wave of out-of-court workouts in Korea

Partners in restructuring team 8
Active cross-border restructuring and insolvency matters 5

History of the practice

Yulchon got its boots on quickly for restructuring and insolvency during the Asian Financial Crisis of the late 1990s. It dusted off Korea's rarely used bankruptcy and insolvency laws and responding to the changing environment with an expanded practice that handled some of the most important bankruptcy, workout and corporate restructuring cases of the time.

The firm defines itself as being equally strong both in and out of court, and is seeking to follow what it sees as an increasing trend of companies seeking flexible out-of-court corporate rescues. It has sought to import new tools to Korea's restructuring scene, which have expanded the out-of-court options available in the Korean market, including in the 2014 debt-for-equity swap of trading company STX Corporation's publicly listed bonds. That deal has since formed the template for subsequent major bond restructurings in Korea, and led debtors like Dongbu Metal and Posco Plantec to the firm's door looking for a similar outcome.

The practice's major names are Chul Man Kim, a former judge who joined the firm after 20 years at Kim & Chang, STX counsel Ki Young Kim and Sun Kyoung Kim.

Who uses it?

Hyundai Merchant Marine, Hapag-Lloyd, Procter & Gamble International Operation, Gillette Shanghai and Daewoo Shipbuilding & Marine Engineering, to cite just a few household names.

Historic track record

The firm was behind one of Korea's biggest recent rescues in 2016, for Hyundai Merchant Marine (HMM), which included a restructuring public bonds, adjusting of loan terms and conversion of bond debt into equity over the course of only four months. The impressiveness of that outcome for HMM has only gained in stature since then, after fellow shipping company Hanjin went into liquidation, despite a debt-to-equity ratio almost half HMM's. Yulchon teamed up with Cleary Gottlieb Steen & Hamilton as international counsel for this case.

In 2013, Yulchon also advised the then STX Pan Ocean throughout its entire rehabilitation process, and represented it in a number of claim finalisation proceedings, going on to represent the buyer in the shipping company's US$1.7 billion sale. Since then, the company has gone simply by the name Pan Ocean.

Recent events

In 2017, the firm achieved Korea's first M&A deal through a stalking-horse bidder, advising on industrial wire maker Kiswire's acquisition of engineering company Hanil E&C. Earlier, Yulchon had won a court order placing Hanil E&C into rehabilitation proceedings.

It also advised Daewoo Shipbuilding & Marine Engineering (DSME) in its 2017 bond restructuring, ordered as a condition of a US$2.6 billion state bank bailout. The firm agreed a debt-for-equity swap with DSME's biggest bondholder, the national pension service, after which the remaining bondholders approved an exchange converting half of their debt to equity and extending the maturity of the remainder by three years.