Luxury e-commerce platform Balaan is effectively heading toward bankruptcy.
The Seoul Rehabilitation Court announced on Sunday that it has terminated rehabilitation proceedings for Balaan. "The court decided to terminate rehabilitation proceedings as of February 6," the court stated in its public notice. "The rehabilitation plan was rejected at the creditors' meeting."
At the creditors' meeting held on February 5, Balaan failed to secure the required approval rate for its rehabilitation plan. The plan needed consent from two-thirds of creditors to pass, but received only 35% approval. Balaan attributed the rejection to opposition from major creditor Silicon2, which holds 24.6% of claims, and incomplete documentation from some small creditors.
The court also declined to grant a compulsory approval that Balaan had hoped for. In the earlier case of TMON, the court had granted compulsory approval after the rehabilitation plan was rejected when one creditor group failed to reach the required threshold. When creditors are divided into groups, approval rates are calculated separately for each group, and the court can grant compulsory approval if at least one group meets the threshold. "In Balaan's case, creditors were not classified into separate groups," a court official said. "Therefore, the requirements for considering compulsory approval were not met."
While Balaan may still file an appeal, industry observers expect the company to proceed toward bankruptcy.