Support for Qoo10-platform merchants doubled to $871 million

Industry

Support for Qoo10-platform merchants doubled to $871 million

Published: 07 Aug. 2024, 17:50 Updated: 07 Aug. 2024, 18:21

PARK EUN-JEE
park.eunjee@joongang.co.kr

A consultation desk for the affected sellers at TMON and WeMakePrice opens at the Financial Supervisory Service in Yeouido, western Seoul, on Wednesday. [YONHAP]

The government will funnel a total of 1.2 trillion won ($871 million) to aid thousands of merchants affected by the delayed payouts at Qoo10-owned online marketplaces, more than doubling the initially announced 560 billion won.

Still, the fate of the imperiled e-commerce sites remains unclear as no viable investors have emerged yet.

Under the second round of measures announced Wednesday, the funding — primarily offered in the form of low-interest loans — will be reserved for sellers on TMON, WeMakePrice and Interpark Commerce.

The Financial Services Commission (FSC) estimated that the value of unsettled payments owed to sellers totals 278.3 billion won as of Aug. 1. The number of affected sellers comes to 3,395 as of the same period, according to the Financial Supervisory Service.

Damages for consumers are estimated to be at least 6 billion won, although the actual size will likely balloon since the figure only factored in purchased goods, not travel packages or tickets.

Applications for the emergency funding are set to open Aug. 9.

To provide low-interest loans for small businesses suffering from delayed payouts, the Small Enterprise and Market Service and the Korea SMEs and Startups Agency will provide 200 billion won, while the Korea Credit Guarantee Fund and Industrial Bank of Korea will raise at least 300 billion. Regional governments will chip in a combined 600 billion won on top of the additional financial support of 60 billion won for travel agencies.

The financial regulators are aiming to complete refunds for consumers who bought goods on the troubled sites, but the procedure for those who bought tickets and travel packages has been delayed. The FSC said that it will initiate a mediation process next week for such customers.

The heads of TMON and WeMakePrice said that they are meeting with potential investors or acquirers, but discussions have barely advanced.

WeMakePrice CEO Ryu Hwa-hyeon said on Wednesday that “a most-preferred buyer” walked away from negotiations two days ago.

A Seoul court approved applications last Friday for a restructuring program filed by the two indebted companies.

With the court's decision, they are now eligible to initiate the restructuring process without entering receivership, securing a grace period of at least one month.

On July 29, TMON and WeMakePrice filed for receivership as well as autonomous restructuring support, or a so-called ARS program, with the Seoul Bankruptcy Court. The ARS program is a preliminary phase before a company enters formal receivership.

To prevent a recurrence, the authorities also pledged to reduce the settlement period for payouts between e-commerce operators and their sellers, making it shorter than that for established retailers and partnered sellers.

Still, a specific period has not yet been decided as the government needs to consult with industry insiders.

BY PARK EUN-JEE [park.eunjee@joongang.co.kr]