[Edaily Marketin, Reporter YunJi Kim ] With just one month remaining before the forced sale of the founder’s stake in OGQ, South Korea’s largest intellectual property (IP) content startup, plans to recover investment funds through a selective capital reduction and the sale of the founder’s personal shares are once again being discussed. While OGQ CEO Shin Cheol-ho’s side maintains that relevant consent must be secured first, the investment fund is countering that it will only consider suspending the execution if a concrete plan is established that allows for the recovery of both principal and interest.

Agreement on Capital Reduction First vs. Full Debt Recovery Plan First

According to a comprehensive report by Edaily on the 23rd, the solutions currently under discussion are a differential capital reduction and the sale of CEO Shin’s personal shares. Under this structure, OGQ would return the principal investment using the proceeds from the capital reduction, while CEO Shin would cover late payment damages and litigation costs by selling a portion of his personal shares.

In fact, the differential paid-in capital reduction was a plan first proposed by the investors back in 2023. According to the court ruling, the investors did not file a lawsuit immediately after the acquisition fell through; instead, they proposed a differential paid-in capital reduction in May 2023 and subsequently sought a resolution through the signing of a supplementary agreement. However, when a company-level repayment plan failed to reach an agreement, they reportedly filed a lawsuit that same year against CEO Shin personally, seeking to hold him liable for contractual repayment obligations.

CEO Shin’s side presents a different account. CEO Shin maintains that acquisition negotiations continued even after the lawsuit was filed, and the deal was not finally called off until 2025. He claims that, subsequently, OGQ resolved at a board meeting to initiate the capital reduction process and requested consent from the investors, but the investors refused, citing the need for internal discussions among the limited partners (LPs). He stated, “At a meeting this past January, the investors’ representative said, to the effect that ‘even if you send a shareholder consent form, it would be difficult to agree because internal discussions have not taken place,’” adding, “We can only prepare an implementation plan once the necessary consent for the capital reduction and the sale of my personal shares has been secured.”

The asset management firm maintains that a settlement plan covering the entire debt—including not only the principal but also late payment damages and litigation costs—must be presented first. In particular, it believes that CEO Shin should bear the late payment damages incurred while he was pursuing appeals following the first-instance ruling. The firm explains that reducing the debt recognized by a final judgment could raise questions regarding the LP’s responsibility for fund management.

An official from the asset management firm told Edaily, “We are by no means fundamentally opposed to a selective capital reduction; this enforcement is not a measure to secure management control of OGQ but rather a debt recovery procedure based on a final judgment.” The official added, “It was difficult to give immediate consent because the criteria for calculating the capital reduction amount, the method for handling the remaining judgment-based claims after the reduction, and whether other shareholders would consent were unclear.” The argument is that if the structure involves settling only the principal through the capital reduction while leaving late payment damages and litigation costs outstanding, it is difficult to view this as ensuring the full recovery of the claims.

Selling Personal Shares to Avoid Forced Sale… Persuading Shareholders Is the Key Variable

With

the forced sale

just one month away, the only realistic solution available to CEO Shin to meet the asset management company’s demands is to sell his personal

shares

. This approach involves settling the principal through a capital reduction and using the proceeds from the sale of his shares to cover late payment penalties and litigation costs. However, since a specific shareholder opposes the sale of shares, CEO Shin’s top priority remains persuading that shareholder to secure their consent.

CEO Shin’s side plans to resubmit a request for the consent required for the differential capital reduction and the sale of his personal shares. He stated, “We plan to resubmit the request for consent regarding the capital reduction and the sale of my personal shares this week or early next week,” adding, “Even though I want to sell my personal shares to cover the interest and litigation costs, I am unable to proceed with the necessary steps because I lack the required shareholder consent.”

Meanwhile, views on this matter are divided within the capital markets. While startup industry insiders point out that, given the presence of remaining investment principal in the company’s account, the company should have first finalized recovery measures—such as a selective paid-in capital reduction—at the corporate level, others argue that since the investment funds were raised on the premise of a specific merger and acquisition (M&A) deal and included repayment conditions in the event the transaction fell through, it is difficult to view this solely as a shift of responsibility onto the founder.

The asset management firm maintains that the mere presence of funds in the company’s account does not guarantee recovery. They maintain that, given the company’s failure to finalize an actual repayment plan through lawful procedures such as a capital reduction—and with CEO Shin’s personal liability for repayment now confirmed—it was difficult to delay the return of funds to limited partners (LPs). However, some observers point out that, with principal remaining in the company’s account while the forced sale of controlling shares is proceeding, an agreement is needed to settle both the company’s funds and the CEO’s personal debts together.