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Pizza Hut Korea enters corporate rehabilitation

Published: 16 Dec. 2024, 18:58

KIM JU-YEON
[email protected]

A pedestrian walks by a Pizza Hut store in Seoul on Nov. 5. The Seoul Bankruptcy Court initiated corporate rehabilitation proceedings for Pizza Hut Korea on Dec. 16. [NEWS1]

Pizza Hut Korea will enter corporate rehabilitation after failing to negotiate the payment of a 21 billion won ($15.2 million) fine it incurred for allegedly adding costs to materials without the store owners’ consent.

The Seoul Bankruptcy Court initiated corporate rehabilitation proceedings for Pizza Hut Korea on Monday, the franchise said in a news release the same day.

Pizza Hut now has until March 20 to submit a final application to the court. The court will assess the firm’s assets, liabilities and creditors, among others, to determine whether the company’s public interest value is worth more than it going bankrupt.

Pizza Hut said it had entered corporate rehabilitation as it could not “reach an agreement by negotiating with creditors under the court’s guidance through the autonomous restructuring support [ARS] program.”

“We cannot operate the business normally as our accounts have been seized,” the chain said.

Pizza Hut filed to begin ARS in early November. The company’s ARS program was approved on Nov. 8, which granted the company at least a month to restructure its debts with its creditors, but the chain decided not to extend the program after failing to reach a deal.

In an appellate trial in September, the Seoul High Court partially sided with 94 franchisees who sued Pizza Hut Korea for allegedly imposing additional costs not agreed upon in their contracts. The court fined the franchise 21 billion won that it had received in additional payments from franchisees from 2016 through 2022. Pizza Hut appealed the ruling and is awaiting a final ruling from the Supreme Court.

“The company will make every effort to sustainably operate the business by normalizing headquarters management under the supervision of the court and by improving the franchisees’ profits. We will, once again, make our case to the Supreme Court on the issue of returning the added margins and will uphold our part after receiving a ruling in accordance with the law and principles,” Pizza Hut said.

More than 330 Pizza Hut stores in Korea continue to operate normally, Pizza Hut added.

BY KIM JU-YEON [[email protected]]