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A person walks by Tmon headquarters in southern Seoul on Monday. (Yonhap) |
Cash-strapped e-commerce platforms Tmon and WeMakePrice filed for corporate rehabilitation on Monday.
The Seoul Bankruptcy Court announced that the two companies, embroiled in controversy over delayed payments amid a liquidity crisis at their Singapore-based parent, Qoo10 Group, have sought court-supervised restructuring.
Corporate rehabilitation allows financially distressed companies to restructure their debts and operations. While this process enables the companies to continue their business and improve financial stability, it temporarily freezes claims from creditors, meaning vendors will not be able to recover their payments immediately.
If the companies fail to secure creditor approval during the rehabilitation process, they risk insolvency, which would prevent vendors from reclaiming their money.
The court will review the companies' applications and decide on their corporate rehabilitation likely within about a week.
According to government estimates made that day, the amount owed to vendors by the two platforms totaled 213.4 billion won ($154.2 million) as of Thursday, with 128 billion won from Tmon and 85.4 billion won from WeMakePrice. This figure is expected to increase as additional transactions approach their settlement dates.
To support the small merchants affected by the two platforms' payment delays, the government is injecting over 560 billion won.
This includes a 200 billion won emergency management stabilization fund from public institutions for small enterprises and over 300 billion won offered through a support program jointly launched by the Korea Credit Guarantee Fund and the Industrial Bank of Korea. Additionally, the Culture Ministry will allocate 60 billion won specifically for the particularly hard-hit travel sector.
The plan also included further support measures, such as cooperation from private and public lenders to extend loans and guarantees for the affected vendors, as well as the extension of tax payment deadlines and assistance in finding new business channels.
The government is collaborating with the tourism and financial sectors to ensure customer relief, calling for prompt refunds from card and mobile payment companies and urging travel companies to meet their contractual obligations. Additionally, from Aug. 1 to 9, financial regulators will operate dedicated complaint desks and accept collective dispute resolution applications from affected consumers in the travel sector.
Meanwhile, Qoo10 CEO Ku Young-bae issued his first official statement on Monday, apologizing for the situation and pledging to take steps to resolve and minimize customer harm.
"Qoo10 and I fully acknowledge our responsibility for this situation and commit to using all available resources, including my personal assets, to secure liquidity for both Tmon and WeMakePrice," Ku said.
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Consumers suffering from delayed payments from e-commerce platforms Tmon and WeMakePrice stage an umbrella protest, calling for apology and measures to recover damage, in front of the two platforms' owner Qoo10 headquarters in Seoul on Sunday. (Yonhap) |
He estimated that customer losses from Tmon and WeMakePrice total around 50 billion won, primarily affecting travel-related products.
To support refunds and recovery efforts, the cash-strapped company is seeking new funding through Qoo10’s overseas capital and by disposing of or using its assets and shares as collateral, according to Ku.
While the full extent of vendor damage remains difficult to determine, Ku noted that the firm plans to introduce a compensation program covering delayed interest payments and reduced sales commissions for partners.
Qoo10 is also pursuing mergers and acquisitions for additional funding, though details are not yet available due to strategic reasons, Ku added.
"I will also sell or pledge my Qoo10 shares, which constitute the majority of my assets, to help resolve this situation," the CEO claimed.
Ku also promised to undertake group-level restructuring and management system innovations once the situation is resolved.
"We will actively seek to improve cost structures through affiliate mergers and shift to a profit-centered business model while enhancing partner involvement in management and the board through collaborations," he stated.
Ku's statement did not specify the amount Qoo10 plans to inject. Reports suggest Qoo10 aims to raise around $50 million in August, primarily through Wish, the US e-commerce platform it acquired earlier this year.
However, the Financial Supervisory Service stated on Sunday that it had not received details about this plan. Even following Ku's statement, the agency said that neither Ku nor Qoo10 had provided additional information regarding their fundraising efforts.
In the meantime, customers are gearing up for a class-action lawsuit against Qoo10.
On Monday afternoon, a group of customers affected by payment delays on Tmon and WeMakePrice filed a criminal complaint against key officials of Qoo10 and the two online shopping platforms -- including Ku -- with the local police on charges of fraud and embezzlement, according to their legal representative law firm Sim. They also filed a civil lawsuit seeking refunds at the Seoul Central District Court.
The law firm added vendors on the platforms will also file a collective lawsuit later this week.
