Woori Bank, in a surprise, seizes account in workout

Woori Bank said yesterday it has temporarily seized the deposit account of Kumho Industrial, which is currently in the process of a workout, as approved by the court.

It is unusual for a creditor to seize the bank account of a company under a workout.

The account in question was opened at the state-owned Korea Development Bank (KDB), also a creditor of the troubled company.

“We had no other choice but to seize the deposit account as a means of securing collateral,” said a Woori Bank official. “We have been demanding that Kumho Industrial provide collateral separate to the debt that is under negotiation with creditors.”

The official added that the bank has requested the seizure early last week at Seoul Central District Court, which approved during the weekend.

Woori has demanded the return of the 60 billion won ($55.6 million) it has made in the establishment of Kumho Industrial’s subsidy in Vietnam Kumho Asiana Plaza Saigon (KAPS).

The bank proposed that Kumho Industrial put its KAPS shares as collateral if it can’t pay the debts. However, it was said Kumho Industrial refused.

KDB expressed disappointment with Woori’s decision.

“While other creditors are making all efforts in trying to normalize Kumho Industrial, Woori’s selfish action of only trying to rake in their share is wrong,” said a KDB official.

The creditors of Kumho Industrial plan to hold a meeting to resolve the situation. However, Woori’s move could be an obstacle to a solution.

By Lee Sang-ryeol [ojlee82@joongang.co.kr]