Corporate bankruptcy filings hit all-time high in Korea amid global pandemic

Corporate bankruptcy cases in July posted a historic high with 103 filings, mirroring the global impact of the pandemic and its heavy blow to South Korea's economy. Also, 29,008 personal bankruptcy filings have been submitted this year as of August 21, the highest since 2017.

Between January and July of this year, there were 625 corporate bankruptcy filings submitted to 14 courts nationwide, including the Seoul Bankruptcy Court. This is the highest number of corporate bankruptcy filings since 2013 when counting first began.

It is also a 10.4% increase from the 566 corporate bankruptcy filings submitted between January to July in 2019 and a 35.5% increase from the 461 cases in 2018 during the same period.

“Generally there aren’t many filings during the summer because it overlaps with the holiday period, but the recent pandemic has caused a recession, which has led to a noticeable increase in corporate bankruptcy,” said a former judge from the bankruptcy department.

Meanwhile, court receivership filings decreased to 521 cases between January and July, an 11.7% drop from 582 cases during the same period last year. There were 73 filings for court receivership in July, which is a 26% decrease from the 92 filings in June.

Legal industry experts are saying that corporates are choosing to file for bankruptcy instead of court receivership because it is too difficult to maintain their businesses amid economic uncertainty.

 

Write to Jeong-min Nam at peux@hankyung.com