[Edaily Marketin Reporter YunJi Kim ] The reorganization plan was rejected once, and the reorganization proceedings were ultimately terminated. Not a single entity submitted a letter of intent or a bid during the second public auction. Even at the final creditors’ meeting, consent could not be obtained from key secured creditors.

This is the story of One Mount, a mixed-use leisure complex in Goyang, Gyeonggi Province, which has faced several critical moments where the deal nearly fell through. Currently, the 179 billion won sale of One Mount has completed the process up to the approval of the reorganization plan. This comes approximately six months after the company filed a new application on the very day the decision to terminate the initial reorganization proceedings became final. This outcome resulted from refining the transaction structure by addressing the issues revealed in the first round through the logic of the reapplication, the merger and acquisition (M&A) structure, and the approach to creditors.

Resubmitted on the very day the dismissal was finalized… Swift response proved decisive

According to the investment banking (IB) industry on the 31st

the One Mount M&A is being hailed as a case study in which issues identified during the first rehabilitation proceedings were incorporated into the second transaction structure, ultimately leading to the approval of the rehabilitation plan. It is explained that the key to success was the step-by-step refinement of the rationale for the reapplication, the stalking-horse structure, and the approach to persuading creditors. Another notable feature of this transaction was that Baruljeong Law Firm, which served as both the representative for the rehabilitation application and the lead advisor for the sale, incorporated the issues identified in the first proceedings into the second rehabilitation process and the terms of the deal.

One Mount is a multi-purpose leisure complex that operates a water park, sports club, and shopping mall. Its financial difficulties deepened as operations at its main facilities were severely curtailed for an extended period due to the COVID-19 pandemic, leading it to file for reorganization with the court in July 2024. Subsequently, with the court’s approval, it proceeded with a pre-approval M&A and selected Leading Asset Management as the prospective acquirer; however, the reorganization plan was rejected at the first creditors’ meeting. This was because neither the secured creditors nor the unsecured creditors met the statutory approval thresholds. At the time, the approval rates were 43.97% and 61.24%, respectively. On February 5, the court decided to terminate the reorganization proceedings, and this decision became final on the 20th of the same month.

On the very day the termination decision became final, Wonmount filed for rehabilitation proceedings again. Since the rehabilitation plan had already been rejected once, the key to getting the court to accept the reapplication was to explain what had changed compared to the first proceeding. Baruljeong, the law firm representing One Mount, structured its case for the reapplication around several points: that some of the underlying assumptions—which had served as the basis for creditors’ opposition during the first reorganization—had changed; that the acquisition price had increased from 170 billion won to 179 billion won; and that additional time could be secured to persuade creditors. Based on this, the court decided to commence the second reorganization proceedings last April.

During the second rehabilitation proceedings, Baruljeong, while also serving as the lead advisor alongside Samil Accounting Firm, redesigned the M&A process. By utilizing asset and debt data already verified during the first proceedings, they streamlined the due diligence and subsequent schedule; just three days after the decision to commence proceedings, they applied for permission to proceed with an M&A prior to court approval, and within nine days, they signed a conditional acquisition agreement with Leading Asset Management.

Subsequently, no new prospective buyers emerged during the public bidding process. Although there were no participants in either the letter of intent submission at the end of April or the final bidding in May, the transaction was not halted. This was because the “stalking horse” structure—in which a conditional acquisition agreement had been previously signed with Leading Asset Management—had already been put in place. Under this structure, if a new prospective buyer emerges, a competitive bidding process is initiated; if the auction fails, the conditional acquirer becomes the final prospective acquirer. Accordingly, after the public auction failed, Leading Asset Management was selected as the final prospective acquirer.
Persuading

Over 300 Creditors… Safeguards Reinforced After Rejection

Following the selection of the acquirer, securing creditor approval remained the key challenge. Unlike typical reorganization cases centered on financial institutions, Wonmount had a high proportion of individual creditors. According to the second investigative report, out of 211.3 billion won in reorganization-secured claims, claims for the return of lease deposits by commercial tenants totaled 139.6 billion won—accounting for approximately 66%—and the number of related creditors reached 302. It was a structure in which the will of the majority of individual tenants determined whether the reorganization plan would be approved.

The period for persuading creditors, which had lasted only about two weeks during the first reorganization, was extended to about five weeks for the second attempt. The approach to explanation was also shifted from emphasizing the merits of the reorganization plan itself to comparing the expected repayment amounts in the event of bankruptcy versus reorganization. While the approval rate among unsecured creditors rose to 75.66%, exceeding the statutory requirement, that of secured creditors stood at only 38.46%, falling significantly short of the 75% threshold required for approval.

The issue raised by secured creditors in the reorganization was the timing of repayment. Concerns were raised that while the payment of the balance by Leading Asset Management could be postponed for several years, the debt-to-equity conversion could take place earlier, potentially reducing the size of their claims before they actually received repayment.

Taking these circumstances into account, the Seoul Bankruptcy Court established a rights protection clause postponing the effective date of the debt-to-equity conversion until after the payment of the remaining acquisition price, and approved the reorganization plan on the 18th. This measure safeguards the rights of secured creditors by ensuring their existing claims remain intact until the acquisition price is actually paid.

The investment banking (IB) industry views it positively that Baruljeong quickly addressed the issues identified during its first reorganization proceedings in its second attempt. It is assessed that several factors contributed to the approval of the reorganization plan: filing a new application on the very day the previous plan was officially dismissed; restructuring the M&A process and the stalking-horse arrangement; and adjusting the persuasion strategies and timelines to accommodate the high proportion of individual creditors.