Pantech to end court receivershipPantech, the country’s third-largest mobile phone maker, faces bankruptcy after it withdrew its application for court receivership, which could lead to the shutdown of hundreds of its partners and affiliates.
Since last August, Pantech has looked for a buyer but said it failed to find one that is “suitable.”
“For the past 10 months, in order to resolve the difficult management situation, [employees] returned their salaries voluntarily and took [unpaid] holidays to reduce the cost,” the company said in a press release on Tuesday under the name of its CEO, Lee Joon-woo. “But we couldn’t find a suitable buyer who recognizes the value of Pantech.”
As Pantech “can’t take social responsibility and play a role as a company,” according to the release, it applied for its application for court receivership to be withdrawn.
“We apologize to the shareholders, creditors and other people, including our partners,” Pantech said. “We particularly appreciate our customers who loved Pantech products and deeply seek your apology.”
The company continued that although it cannot announce a schedule for proceedings after the withdrawal, it will make an effort to minimize any inconveniences its customers could face.
According to Pantech’s annual report submitted to the Financial Supervisory Service, its total assets amounted to 279.4 billion won ($253 million) as of December, while its total debt was 996.1 billion won.
Since it was announced that Pantech was up for sale last September, several companies from Korea and overseas submitted letters of intent to the court, but none placed a bid until November, the legal deadline.
If a local court in Korea declares bankruptcy for Pantech and starts the relevant processes, it could have a domino effect on about 550 companies that are in partnership with Pantech.
Roughly 80,000 employees work for the partners, half of which are reportedly already bankrupt as the procedures for Pantech’s court receivership have dragged on.
The 24-year-old company was considered a rising star in Korea’s IT industry. It started as a small venture in the early 1990s with only 40 million won ($36,238) in initial capital. Its yellow beeper was a hit in the Korean market back then. In the late 1990s, it moved to producing cellphones, which generated most of its annual profits.
Young Korean students yearned for a smartphone from its Vega series. In 2013, the company ranked as the nation’s second-largest player in the smartphone market, beating LG Electronics. Its biggest marketing point was the cheaper prices of its products compared to its competitors.
In 2012, Pantech’s heyday, it recorded about 3 trillion won in annual sales and was referred to as a “hero” for ventures in Korea.
However, amid saturation in the worldwide smartphone market Pantech started to go downhill. It entered a debt workout program last March.
If the court declares bankruptcy, all of the patents the company held are expected to disappear. As of the first quarter of this year, Pantech holds more than 4,000 patents as it has invested about 2.5 trillion won into its R&D for the past decade.
BY KIM HEE-JIN [firstname.lastname@example.org]