Restructure with speed

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Restructure with speed

Financial authorities have demanded that banks complete the process of discerning which among 111 construction and shipbuilding firms are healthy and which are not by Jan. 23.

The demand that the restructuring candidates be sorted out is aimed at finding out which companies are to be revived and which are to be left to go under before the Lunar New Year. Through this request, the authorities revealed their will to swiftly complete the process. The restructuring criteria have already been prepared. What’s left is for creditors and financial institutes to decide which firms should be saved.

How fast we can overcome the current economic crisis depends on how swiftly and thoroughly we restructure companies. When company insolvency issues are resolved, the credit crunch will be, too. Measures to stimulate the economy can then be carried out to the fullest extent.

When healthy and dying companies are mixed in the market, no matter how much cash is pumped into banks, the money doesn’t go to the firms. In this regard, the first round of restructuring will be a testing ground to see how effective further efforts will be. When construction and shipbuilding companies, which pose the biggest risk of insolvency, are sorted out, the restructuring of other industries can gain momentum.

But some creditors and banks seem to question the criteria that have been created for evaluating the companies and the credibility of the evaluation data. This creates conflict among creditors and might prolong the restructuring process.

But speed is now a matter of greater importance. The criteria can be adjusted in the course of undertaking the task. The criteria themselves must not delay or cancel the restructuring process.

If conflicts arise, a mediation organization for creditors and financial institutes must immediately go into operation to resolve differences of opinion. If need be, participants in the restructuring - namely creditors, financial institutions and companies - should submit memoranda of understanding or performance agreements in a bid to get rid of potential reasons for further legal disputes.

It must be clarified that employees of the financial authorities, creditors and financial institutions who participate in the restructuring will not be asked to take responsibility for unexpected consequences afterwards. Only then can the restructuring process, where the interests of different parties are entangled, be undertaken in a bold manner.
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