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Troubled e-commerce platform Balaan CEO slapped with travel ban amid fraud allegations

Published: 07 Apr. 2025, 16:00 Updated: 07 Apr. 2025, 21:25

Choi Hyung-rok, CEO of Balaan, attends the Seoul Bankruptcy Court in southern Seoul on April 3. [YONHAP]

Police have imposed a travel ban on Choi Hyung-rok, the CEO of luxury e-commerce platform Balaan, amid allegations of fraud and embezzlement.

The Suwon Nambu Police Precinct in Gyeonggi confirmed on Monday that a complaint was filed against Choi late last month by a supplier who claims nonpayment for delivered products. Following an initial investigation, authorities prohibited Choi from leaving the country.

Similar complaints from other vendors are reportedly being filed nationwide. The police plan to designate a lead investigative agency based on Choi's residence and business locations to conduct a comprehensive inquiry.

This development follows the Seoul Bankruptcy Court's decision on Friday to initiate corporate rehabilitation proceedings for Balaan.

Corporate rehabilitation is analogous to Chapter 11 in the United States.

The court cited the company's financial distress due to accumulated operating losses from substantial marketing and fixed costs, as well as decreased consumer trust in e-commerce platforms after incidents involving companies like TMON and WeMakePrice. The court has set a deadline of June 27 for Balaan to submit a rehabilitation plan.

Luxury retail platform Balaan [SCREEN CAPTURE]

The court opted not to appoint an external administrator, allowing Choi and the current management team to continue overseeing company operations during the rehabilitation process.

Balaan's financial challenges have been attributed to aggressive early-stage investments in marketing and fixed assets, coupled with a downturn in the e-commerce sector's reputation following controversies involving other platforms. The company's inability to secure anticipated investment exacerbated its liquidity issues.

As the rehabilitation proceedings progress, the court will evaluate Balaan's submitted plan to determine the feasibility of restructuring. Should the court find the plan unviable, the company may face bankruptcy.

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.

BY HAN YOUNG-HYE [[email protected]]