Yim Jong-yong, Chairman of the Financial Services Commission, reiterated the three principles of corporate restructuring projects undertaken by financial regulators and creditor banks that they include (1) strict credit evaluation by creditor banks; (2) self-help effort as a pre-condition for government financial support; and (3) fast and determined normalization effort.
He said this on October 24 in an athletic event for the commission's employees held in Yongin, outside Seoul, adding, "The ultimate goal of corporate restructuring is to let companies worth surviving live while letting those not worth it die. In light of this simple principle, only those companies trying hard to restructure themselves should be helped."
He also stressed, "Unless companies show strong willingness that they will do everything to improve themselves, the government won't give support to them," hinting that the union of Daewoo Shipbuilding & Marine Engineering must give pledges that they won't go on a strike and promise to freeze their salaries until the company gets back on its own feet.
Mr. Yim added that the bid by creditor banks to decide whether to give financial support to marginal firms will be actively encouraged by the government. He said, "Up until now, most banks have been reluctant to engage in corporate restructuring efforts by focusing instead on raising their short-term profitability. If you keep letting marginal firms without a possibility for getting better survive on government money, it will drag the whole national economy down along with them. But it is equally important that the government provide adequate help to those firms that have a potential for revival.
