GRR 100 2018

Yulchon

Yulchon

Professional notice

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

Partners in restructuring team8
Active cross-border restructuring and insolvency matters5

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.

Yulchon LLC was founded in 1997 by a group of elite legal professionals to create “a village of lawyers combining their talents”, the literal meaning of Yulchon. Young, ambitious and ready to overcome the most difficult challenges, Yulchon has since earned a reputation for turning the tide in adverse situations and changing the legal landscape to achieve the best outcome for its clients.

Yulchon’s Insolvency and Restructuring Practice was founded on this spirit, and since its inception, has contributed significantly to the fast developing law and practices in Korean bankruptcy. The Team’s ground-breaking successes include concluding the massive out-of-court restructuring deals for Hyundai Merchant Marine and Daewoo Shipbuilding & Marine Engineering, achieving the first successful stalking horse bid in Korea for Hanil E&C, and successful filing of the first parallel bankruptcy of a global Dutch company in Korea on behalf of its creditor. The team’s recent complex out-of-court restructuring deals, most notably where massive public bond issuances and other complicated financial instruments are involved, have created a new trend in voluntary debt restructuring of distressed companies. The team’s first stalking horse bid case now became the standard precedent for sales of distressed companies. Moreover, the team’s first parallel bankruptcy case has become the precursor to the Team’s huge success in cross-border insolvency cases, including the STX Pan Ocean case, which holds the record for obtaining timely recognition of Korean rehabilitation proceedings in the most jurisdictions.

Yulchon’s Insolvency and Restructuring Practice is comprised of leading professionals committed to excellence, with expertise in diverse areas of law. Our extensive experience, collective knowledge, and in-depth understanding of the insolvency court proceeding enable us to provide our clients with sound advice and creative but commercially feasible solutions to problems. The Team includes attorneys with expertise in tax, corporate and finance, mergers and acquisitions, real property and construction, and international dispute resolution as well as insolvency law experts. We pride ourselves in our wide experience of outbound/inbound insolvency matters, representing various Korean and foreign clients in the Korean and foreign insolvency proceedings. Moreover, we provide strategic ideas and advice to various investors and financial institutions who seek opportunities or exit resolutions related to companies under special situations.

Yulchon is a full-service law firm prepared to assist our clients in a way that is tailored to the needs of each of our client. Based on the diverse expertise of Yulchon’s professionals and our unique collaborative problem-solving system, Yulchon continues to be at the forefront of Korean business growth and legal market development. Yulchon’s reach is global, and has established local offices in China, Russia, Japan, Myanmar, and Indonesia.

Accolades include:

2015 – 2016 Financial Times’ “Most Innovative Law Firm of the Year”

2017 Chambers & Partners’ “South Korea Law Firm of the Year”

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