[Edaily Marketin YunJi Kim Reporter] The submission of a reorganization plan by Watchee, a domestic online video service (OTT) currently undergoing corporate reorganization proceedings, has been postponed once again. While KinoRights’ acquisition of Watcha is currently proceeding as planned, it has been confirmed that the court, acting on its own initiative, has extended the deadline for submitting the reorganization plan by one month. As a result, it is expected to take longer for Watcha to complete its reorganization.

According to investment banks (IBs) and legal circles on the 14th, the Seoul Reorganization Court extended the deadline for Watchee to submit its reorganization plan by an additional month on the 11th, in accordance with the “Act on the Reorganization and Bankruptcy of Debtors.” Consequently, Watcha must submit its reorganization plan to the court by October 14, after which debt restructuring and management normalization procedures will proceed following approval by creditors.

Watcha was once a leading homegrown OTT service in Korea that attracted significant attention from the venture capital industry. Although it expanded through successive rounds of investment and preparations for an initial public offering (IPO), it faced difficulties raising funds as competition intensified between global OTT services and major domestic platforms, and the investment market froze. Although it subsequently secured liquidity through convertible bonds (CBs) and other means, it was unable to alleviate its repayment burden and ultimately entered rehabilitation proceedings in August of last year.

The process of finding a new owner after entering rehabilitation was not smooth. Watcha selected Samjung KPMG as the lead advisor and launched a public sale; at the time, CJ ENM and KinoRights, the operator of an integrated OTT search and recommendation platform, participated in the preliminary bidding. However, neither company participated in the final bidding last April, and the first sale failed.

Subsequently, as Watche sought new acquisition candidates, negotiations with KinoRights resumed, and in July, the two companies signed a conditional investment agreement. Based on this agreement, a public sale was conducted to find a prospective buyer offering better terms, but no additional candidates emerged. As a result, KinoRights remained the de facto sole acquisition candidate, with the purchase price reportedly set at approximately 4.25 billion won.

However, the fact that an acquirer has been selected does not mean the reorganization proceedings will end immediately. Watche must prepare a reorganization plan—based on the acquisition price offered by KinoRights—that outlines repayment terms for each creditor and a plan for handling the existing shareholders’ stakes. The reorganization plan will only be finalized after obtaining creditor approval and court authorization.

The key issue is how existing debts will be settled based on the acquisition price. While the convertible bonds (CBs) previously issued by Watcha are reportedly worth approximately 49 billion won, KinoRights’ acquisition price stands at around 4.25 billion won. Even if most of the acquisition price is used to repay debts, it will be difficult to cover the total debt; therefore, the reorganization plan will likely need to specify the cash repayment ratio for each type of debt, debt forgiveness, and whether debt will be converted into equity.

Under the current circumstances, it is unlikely that an additional buyer willing to offer a higher price than KinoRights will be found. The industry view is that, given Watcha’s financial condition, revenue scale, and the competitive landscape of the OTT market, there is little incentive to propose a significantly higher acquisition price.

This assessment is also reflected in the valuation conducted by the court-appointed investigation commissioner. According to industry sources, the investigation commissioner reportedly assessed that Watche’s liquidation value exceeds its going-concern value. Simply put, this means that the economic value of liquidation is higher than that of continuing current operations. Consequently, the extent to which profitability can be restored following the acquisition by KinoRights is seen as another key factor in the company’s recovery.

An industry insider familiar with the matter told E-Daily, “The acquisition process involving KinoRights is currently proceeding as planned,” adding, “The extension of the deadline for submitting the reorganization plan was decided by the court; neither Watche nor KinoRights requested the extension.”