Another builder, Byucksan E&C, goes bankrupt

The depression in the Korean construction industry got worse as midsized Byucksan Engineering & Construction declared bankruptcy.

The Seoul Central District Court’s bankruptcy division on Tuesday announced it has decided to wind up a court receivership plan for Byucksan E&C, saying its finances were only getting worse and there was no light at the end of the tunnel.

The court said the company’s debt nearly tripled to 72 billion won ($68 million) during a court receivership period that started in June 2012. Under the law, if a company’s court receivership program is scrapped, the court must declare bankruptcy and allocate its remaining assets to creditors.

Byucksan E&C, which is known for its residential apartment brand Blooming, was founded in 1958 and went through debt workout programs in 1998 and 2010.

The nation’s 35th-largest builder in terms of construction capacity filed for court receivership in 2012 as a debt workout program didn’t go well.

Since then, Byucksan E&C and creditors have been looking for a buyer for the company.

Last year, Akeed Consortium, in which Qatar’s Al-Dafa Group is a member, was selected as a preferred bidder, but it eventually walked away from the deal.

Byucksan E&C is working on 20 construction sites and has about 350 employees.

Industry insiders said Byucksan E&C’s collapse could be the start of a wave this year. According to data from the Construction Association of Korea, 18 companies are either in debt workout programs or under court receivership.

While most are midsize builders, Ssangyong Engineering & Construction, the nation’s 13th-largest builder, is almost certain to be delisted from the stock market. The company, best known for building Singapore’s Marina Bay Sands Hotel, didn’t to come up with business plan by a deadline of the end of March.

Ssangyong E&C, which is listed on the Kosdaq, suffered more than 100 billion won in operating losses in the past two years. The company said its construction projects will continue even if it gets delisted.

“Builders in debt workouts or court receivership have difficulty winning new orders because they are stigmatized as struggling companies,” said an official from the CAK. “Without creditors’ active support, it is difficult for these companies to get back on a normal business track.”

BY JOO KYUNG-DON [kjoo@joongang.co.kr]