Insolvent Companies To Be Cleaned Up Within This Year

The government plans to urge the banks to clean up even the insolvent companies whose debts are below 30 billion won by the end of this year.

Jin Nyum, the Deputy Prime Minister and the Minister of Finance and Economy revealed yesterday the government`s position on the insolvent companies in a speech delivered in the breakfast meeting for the financiers held by the Korea Institute of Finance at the Lotte Hotel in Sogong-Dong, Seoul. He said that ``if necessary, the companies whose net bank loans are below 30 billion won should be sorted out``.

Deputy Prime Minister Jin stressed that ``by the end of the year, the companies which have been under the debt-workout program also should finish the restructuring or the hopeless companies should close the door through the mid-term evaluation. The government will only play a role of fair judge, and the corporate`s ordinary restructuring should be achieved by the financiers``.

An official of the Ministry of Finance and Economy (MFE) explained that ``Jin`s remarks imply that the government will expand the outstanding credit cut-off line of the companies under the court receivership or court-mediated composition program from `over 30 billion won` to `below 30 billion won`, and will include the companies whose debts are below 30 billion won in the subjects of the corporate`s ordinary restructuring system``.

As of the end of April, the 344 companies falls into the category of below 30 billion won in total outstanding credit, which is 71.8 percent of the total companies which have been

placed under the debt-workout programs, court receivership and court mediated composition.

``The corporate`s ordinary restructuring is still far from the satisfaction, but some of ailing companies including the Hyundai Engineering and Construction and the Hynix Semiconductor have been relieved in compliance with market principles,`` said Deputy Prime Minister Jin. ``Since the political season will advent in next year in which it will become hard [to exert the economic policies] , the crucial economic policies should be made clear within one or two months.``

Meanwhile, Deputy Prime Minister Jin told that ``I suggested the chairpersons of the policy committee of the ruling and opposition parties to hold the second round of policy forum discussing the strategies for the balanced regional development, and the 5-10 year plan for the Korea`s industrial strategies and the acquisition of the competitiveness``. They responded positively.

Lee Heon-Jin mungchii@donga.com