SEOUL, July 30 (AJU PRESS) — A Seoul court on Tuesday ordered a freeze on the assets and debts of struggling e-commerce platforms Tmon and WeMakePrice, just a day after they filed for corporate rehabilitation amid a growing payment delay crisis.
The Seoul Bankruptcy Court issued a preservation order to prevent the debtors from disposing of their assets, and a comprehensive stay order to prevent creditors from enforcing their claims against the debtors.
The court plans to hold a hearing on Friday to decide whether to commence the rehabilitation proceeding. Tmon CEO Ryu Kwang-jin and WeMakePrice CEO Ryu Hwa-hyun are expected to attend the closed-door hearing.
The court must decide on the commencement within a month. But the decision may be deferred for up to three months because the companies applied for autonomous restructuring support (ARS), which allows debtors and creditors to negotiate repayment plans autonomously. If a settlement is reached, the rehabilitation filing may be withdrawn.
Since early July, Tmon and WeMakePrice have been delaying payments to sellers on their platforms. The merchants began to cancel listings and withdraw last week while consumers flocked to the companies’ offices in Seoul demanding refunds. Estimated damages exceed 100 billion won ($73 million).
The prosecution and police launched an investigation into the case on Monday after affected consumers filed a complaint against the chief executives of Tmon, WeMakePrice and their Singapore-based parent company, Qoo10, on charges of fraud, embezzlement and breach of trust.
During a Cabinet meeting on Tuesday, President Yoon Suk Yeol ordered the government to deal with the issue strictly according to the law and to keep a close watch on the incident.
On the same day, Ku Young-bae, CEO of Qoo10, attended a National Assembly committee meeting. He testified that his group could mobilize up to 80 billion won but that it was uncertain if all the funds could be used to compensate merchants and consumers.
He also admitted to temporarily using funds from Tmon and WeMakePrice for the acquisition of Wish, a U.S.-based global shopping platform, in February.
Meanwhile, industry sources said Qoo10 controlled the financial management of the two companies by absorbing related departments. Qoo10 took over Tmon in September 2022 and WeMakePrice in May 2023.
Ku is suspected of diverting funds from Tmon and WeMakePrice to support his bid to list the logistics unit Qxpress on Nasdaq.
The sources said Qoo10 integrated Tmon's technology department in April 2023 and absorbed its development and financial functions by June of that year. Qoo10 immediately integrated the financial and development divisions of WeMakePrice upon acquisition in May 2023, they said.
The two online malls have been driven into aggressive marketing campaigns to meet the monthly sales goals set by Qoo10, with employee evaluations based on these targets. Increased sales from the platforms would boost Qxpress’s revenue, which handles logistics, thereby enhancing the prospects for its Nasdaq listing.
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