South Korea

Three affiliates of embattled Tong Yang Group on Monday filed for court receivership as a last resort to avert bankruptcy after they failed to secure funds to keep afloat, the group said. South Korea's 38th-largest conglomerate said its three units -- Tongyang Inc., Tong Yang Leisure Co. and Tongyang International Inc. -- requested a court's order earlier in the day for a corporate revival process, Global Post reported on a Yonhap News Agency story.

When Choi Jong Hyun found his 50 million won ($46,415) annual salary wasn’t enough to cover the 8 percent jump in rent for his Seoul apartment, he decided to cut back on stock investments rather than take on debt. “I would rather cash out the stocks I now hold and not pay additional interest,” Choi, 32, who works in the financial industry and has about 50 million won of investments, said by phone on Sept. 24. Investors like Choi are exiting South Korea’s stock market as rental costs climb to the highest level since at least 1986 and household debt rises to a record.

STX Pan Ocean, the dry bulk carrier unit of Korea's STX Group, is likely to file for court receivership, following a couple of failed attempts by its parent to sell a stake. Receivership is similar to U.S. Chapter 11 bankruptcy, where the court takes a leading role in restructuring the company. A judge at the Seoul Central District Court told The Wall Street Journal that once a company files for receivership, the court freezes the firm's assets, including its debt. It typically takes four months for a court to set up a restructuring plan, he said.

Five years after the global financial crisis, South Korean construction workers are feeling the pinch more than ever as they shoulder a mountain of debt from a real estate bust that has cast a long shadow on the country's growth prospects, Reuters reported. Facing the spectre of bankruptcy, some construction firms persuaded their staff to take up loans to mop up unsold apartments. "There was pressure. There's nowhere else in the world where there's a parallel to these practices," said a construction worker, who declined to be identified due to the sensitivity of the matter.

South Korea unveiled a Won17.3tn ($15.4bn) supplementary budget on Tuesday to support the stalling economy, as domestic consumption remains sluggish while exports slow because of the weaker yen and cooling global demand, the Financial Times reported. The supplementary budget was larger than expected, mainly because it contained plans to raise debt to make up for anticipated tax revenue losses resulting from the slowing economy, and delays to the attempted sale of state holdings in two banks.

The head of South Korea's recently-launched debt restructuring fund said Sunday that it will buy debts held by financial companies just one time, shrugging off worries that repeated help could lead to moral hazards among delinquent borrowers, the Global Post reported on a Yonhap News Agency story. On Friday, the government launched the National Happiness Fund in order to buy debts held by local financial companies, a move aimed at pushing for debt write-offs or debt rescheduling for delinquent borrowers.

Lotte Tour Co., a South Korean tour operator, said Monday it has filed for court receivership as part of its efforts to get back on its feet following the default of a company in which Lotte has a stake, the Yonhap News Agency reported. Lotte Tour said in a regulatory filing that the Seoul Central District Court is scheduled to decide whether to approve its request, though it did not give any specific time frame. Court officials were not immediately reached for comment.

For new South Korean President Park Geun-hye, who in her inauguration speech promised a fairer society, one of the biggest challenges will be to tackle a growing income gap that has seen almost one in two elderly South Koreans slip back into poverty, The Wall Street Journal reported. Ms. Park in her speech on Monday alluded to tougher economic times ahead, talking about a new chapter in the economic miracle that lifted many South Koreans out of poverty in the decades of breakneck growth after the Korean War—but deepened inequalities.

Park Geun-hye took office as South Korea’s first female president on Monday promising to provide a fairer distribution of wealth for the people whose “blood, toil and sweat” formed the foundation of the nation’s prosperity, the Financial Times reported. Speaking before about 70,000 people outside parliament, the daughter of former military dictator Park Chung-hee said she would “open a new era of hope” to allow all citizens “to enjoy the benefits of economic development”.

Korean total household debt rose to a record 937.5 trillion won in the third quarter, undermining Park Geun Hye’s election promise to expand the middle class after she takes over the presidency next week. The debt reached 164 percent of disposable income in 2011, compared with 138 percent in the U.S. at the start of the housing crisis, according to Royal Bank of Scotland Group Plc, Bloomberg reported.