Company S, which ran a golf course, R (18-hole membership-based golf course), filed with the Seoul Bankruptcy Court for rehabilitation procedure with DR & AJU as its legal representative, as the company underwent a liquidity crisis in April, 2016. The company received the decision for the commencement of rehabilitation procedure (the “First Rehabilitation Procedure”) from the Seoul Bankruptcy Court in May, 2016.

In the First Rehabilitation Procedure, the rehabilitation plan to proceed with M&A prior to the authorization thereof where the largest creditor was to acquire Company S at the price of KRW 49 billion was rejected due to a conflict of opinions between the largest creditor and the largest shareholder. Thereupon, the Court made a decision to revoke the rehabilitation procedure in June, 2017. Thereafter, the Court declared Company S bankrupt following the failure of rehabilitation procedure in July, 2017.

DR & AJU, on behalf of Company S, filed for the commencement of rehabilitation procedure in July, 2017 with the Cheongju District Court for the second time, and, exceptionally, was able to receive a decision for the commencement of rehabilitation procedure (the “Second Rehabilitation Procedure”) from the Cheongju District Court in September, 2017 by submitting legal principles showing the possibility for a court to make a decision for the commencement of rehabilitation procedure even for a company that was declared bankrupt following a failure of rehabilitation procedure. Accordingly, the Seoul Bankruptcy Court’s bankruptcy proceedings following the failure of rehabilitation procedure were suspended.

DR & AJU argued that it was essential to attract external funds through M&A to be successful in the Second Rehabilitation Procedure, emphasizing the necessity of M&A using the Stalking-Horse Bid method in order to maximize the salability and the sales price. In fact, Company S proceeded with M&A prior to the authorization of the rehabilitation plan using the Stalking-Horse Bid method after getting the Cheongju District Court’s permission in the Second Rehabilitation Procedure.

In conclusion, the M&A in the Second Rehabilitation Procedure confirmed KRW 61.1 billion and ten thousand as the acquisition price, which was an increase of KRW 12.1 billion from the acquisition price of the First Rehabilitation Procedure. Consequently, the cash reimbursement ratio for the members’ membership deposit claim increased up to 42.12%, which was higher by 10% than that of the First Rehabilitation Procedure (32.33%). A rehabilitation plan with a focus on a shift from the existing membership system to the public system in the management structure of the golf course was submitted to the Cheongju District Court, which made an authorization decision for the rehabilitation plan of Company S on the same day. By virtue of authorization of the rehabilitation plan for the Second Rehabilitation Procedure, the Seoul Bankruptcy Court’s bankruptcy procedure following the failure of authorization of the rehabilitation plan was invalidated and Company S could normalize its management through the new owner.