According to investment banks (IBs) and media industry sources on the 24th, JTBC reportedly did not submit a request for an additional extension to the Seoul Bankruptcy Court ahead of the ARS program’s expiration on the 30th. Consequently, there is speculation that the court could issue a decision to commence rehabilitation proceedings for JTBC as early as the beginning of September.
Previously, when JTBC filed for rehabilitation proceedings in mid-June, it also submitted an ARS request asking the court to postpone a decision on whether to commence the proceedings. The ARS is a system that defers the commencement of rehabilitation proceedings for up to three months and allows for voluntary debt restructuring negotiations with creditors under court mediation.
At the time, the court accepted the ARS request and deferred the initiation of rehabilitation proceedings until the end of July, with an additional extension granted until the end of August. This decision is interpreted as reflecting concerns that, given the nature of the broadcasting industry, the formal commencement of reorganization proceedings could lead to a freeze on commercial debts and a decline in brand value. In particular, as JTBC is entangled in complex commercial debts with outsourced production companies, content distributors, and international sports organizations, it appears that attempts at a soft landing through voluntary negotiations were prioritized.
However, it is reported that little progress was made in coordinating with the financial creditor group during the ARS process, which lasted just over two months. Additionally, the limitation of the ARS system—which allows decisions to be postponed for a maximum of three months—played a role. With approximately 2.5 months already elapsed and the financial investigation by the court and the investigative committee nearing completion, it appears the decision reflects the judgment that proceeding with formal reorganization is now unavoidable.
Once the reorganization proceedings commence in September, the court will appoint a trustee and proceed with the filing and investigation of reorganization claims and secured claims. With the commencement order, all of JTBC’s debts will be frozen, and the settlement of trade receivables and major contractual relationships is expected to begin in earnest.
Industry observers are focusing on the possibility that JTBC will pursue a pre-approval M&A process after entering rehabilitation. A pre-approval M&A involves designating a buyer before the rehabilitation plan is approved and using the acquisition proceeds to repay debts; it is considered a means to resolve non-performing debts and rebuild the financial structure from scratch under court approval. As several potential buyers have been mentioned as candidates for its affiliate, JoongAng Ilbo, it remains to be seen whether JTBC will also receive similar expressions of interest.
An industry insider explained, “While it was difficult to reconcile the interests of individual creditors during the voluntary negotiation phase, debt restructuring and M&A become easier under court-supervised receivership through the court’s authority,” adding, “I understand that companies looking to enter or expand into the broadcasting industry are keeping a close eye on the situation.”
