CONTENTS
- 1. Corporate Bankruptcy Costs | The Repayment Structure Shown by the BALAAN Bankruptcy
- - BALAAN's Asset Scale
- 2. Corporate Bankruptcy Costs | Costs Disbursed First in Bankruptcy Proceedings
- 3. Corporate Bankruptcy Costs | Matters That Creditors Must Confirm
- - Strategies for Creditor Risk Management
- - Comprehensive Legal Advisory for the Protection of Creditors' Rights
1. Corporate Bankruptcy Costs | The Repayment Structure Shown by the BALAAN Bankruptcy
Corporate bankruptcy costs refer to the expenses disbursed in the course of conducting the court proceedings and liquidating assets when a company enters bankruptcy proceedings.
When the assets held by a company fall short of its claims, these corporate bankruptcy costs and estate claims are repaid first, so the amount that ordinary creditors can actually recover may be substantially reduced.
As the luxury-goods platform BALAAN recently entered bankruptcy proceedings, attention has focused on how much the resident sellers and partner companies can actually recover on their claims.
In particular, with the amount of unsettled sales proceeds estimated at roughly 20 billion won, analyses suggest that the rate of claim recovery may be limited when the order of repayment and the scale of assets in the bankruptcy proceedings are taken into account.
According to the distribution industry, more than 1,000 resident sellers were selling goods through BALAAN, and the amount of unsettled sales proceeds is estimated at roughly 17 billion to 21 billion won.
The number of creditors is also reported to reach approximately 1,200.
The issue is that, in bankruptcy proceedings, the repayment of claims proceeds according to the order prescribed by law.
In bankruptcy proceedings, the amount secured by selling the company's assets is allocated in the following order.
- Court proceeding costs
- Estate claims such as unpaid wages and severance pay
- Claims for which a security interest has been established
- Ordinary claims
In BALAAN's case, most of the resident sellers' unsettled sales proceeds and the amounts owed to partner companies are reported to fall under ordinary claims.
Under the transaction structure of a luxury-goods platform, the amount paid by a consumer enters the platform's account and is then settled with the seller after a certain period, and this settlement amount is, in many cases, legally classified as a debt that the platform owes to the seller.
As a result, in the bankruptcy proceedings, such settlement amounts may also be classified as ordinary claims, and their repayment priority may be pushed back.
BALAAN's Asset Scale
Another key variable that determines the rate of claim recovery is the scale of the company's assets.
According to the report of the investigator appointed by the court, BALAAN's liquidation value was assessed at roughly 2 billion won, and its going-concern value at –500 million won.
This is because BALAAN's principal assets consist of an intangible-asset-centered structure as follows.
- Platform brand value
- IT systems
- Customer data
Such assets are not easily converted to cash during bankruptcy, so the amount of cash that can actually be secured in the liquidation process may be limited.
In a situation where the scale of claims is estimated at roughly 20 billion to 30 billion won, if the liquidatable assets amount to only about 2 billion won, full repayment of the claims becomes, in practical terms, a difficult structure.
In addition, given that corporate bankruptcy costs and estate claims are paid first, the distributable funds available to ordinary creditors may be reduced even further.
2. Corporate Bankruptcy Costs | Costs Disbursed First in Bankruptcy Proceedings
Corporate bankruptcy costs are expenses that necessarily arise in order to conduct bankruptcy proceedings.
Representative corporate bankruptcy costs include the following.
- Court proceeding costs
- Remuneration of the bankruptcy trustee
- Asset investigation and management costs
- Asset sale and liquidation costs
- Public notice and administrative costs
Because these costs are indispensable for conducting the bankruptcy proceedings, they are repaid in priority to ordinary claims.
For this reason, where the company's assets are not sufficient, the distribution rate for ordinary creditors may fall substantially after the payment of corporate bankruptcy costs and estate claims.
Within the legal community, there are analyses that, in the BALAAN case as well, the actual distribution rate for ordinary creditors may remain at a single-digit level.
The actual scale of distribution may, however, vary going forward depending on the following factors.
3. Corporate Bankruptcy Costs | Matters That Creditors Must Confirm
When a corporate bankruptcy occurs, creditors must not only confirm the amount of their claims but also analyze the structure of the bankruptcy proceedings together with the scale of assets.
In particular, the following factors have an important effect on the rate of claim recovery.
- The scale of the company's assets
- Whether a security interest has been established
- The scale of estate claims
- The costs of the bankruptcy proceedings
- The number of creditors
In the BALAAN case as well, creditors must file their claims by April 3, 2026, after which a creditors' meeting and the claim investigation procedure are scheduled to take place on April 16.
The following matters are discussed in this process.
Strategies for Creditor Risk Management
Management Area | Principal Response Methods | Points for Creditors to Note |
Claim filing | Filing the claim within the period set by the court | Delay in filing may restrict the exercise of rights |
Confirming the type of claim | Reviewing whether the claim is an estate claim or a secured claim | Has a major effect on repayment priority |
Analyzing the asset structure | Identifying the scale of the company's assets and the possibility of liquidation | For companies centered on intangible assets, the recovery rate may be low |
Consultation among creditors | Participating in the creditors' meeting | Participation in key decisions is necessary |
Legal response | Using the claim investigation and objection procedures | The claim confirmation process is important |
Comprehensive Legal Advisory for the Protection of Creditors' Rights
A corporate bankruptcy is not merely a procedure by which a company's business activities come to an end. It is an important legal procedure in which creditors' rights are determined, including the recovery of claims, the confirmation of claims, and the distribution from asset sales.
In particular, for companies with a high proportion of intangible assets, such as platform companies or startups, the liquidatable assets may be limited, so the amount that creditors can actually recover may vary greatly.
For this reason, the following responses are important in bankruptcy proceedings.
- Responding to the claim filing and claim confirmation procedures
- Claim investigation and the filing of objections
- Participation in the distribution procedure
- Reviewing the asset sale and distribution structure
The attorneys handling debt collection matters at Daeryun Law Firm support creditors in corporate bankruptcy proceedings by providing legal assistance aimed at improving the prospects of claim recovery, including claim filing, responding to the claim investigation, and reviewing the distribution procedure, in order to protect creditors' rights.
In particular, through analysis of the debtor's asset structure and the tracing of transaction flows, they identify claims that may be recoverable outside the bankruptcy proceedings and propose additional legal response measures.
If you find yourself unable to recover transaction payments or settlement amounts because of a corporate bankruptcy, you are welcome to confirm the prospects of claim recovery and your response strategy through the 🔗debt collection legal consultation booking.
