STX, initiating the revival program... Will the self-rescue plan work?

STX, a comprehensive trading company, has applied to the Seoul Bankruptcy Court to initiate rehabilitation proceedings and autonomous restructuring support programs, officially entering the restructuring process aimed at restoring normal operations.

On December 19, STX announced that it has initiated legal procedures to maintain the company’s ongoing value and minimize business operation risks in an uncertain business environment. Industry analysts interpret this move as a response to the liquidity crisis and operational instability that worsened after stock trading was halted last July due to sanctions from the Financial Services Commission.

The procedures applied for by STX include both a rehabilitation petition and an autonomous restructuring support program (ARS). ARS is a system that allows companies to continue operations under certain court protections while independently negotiating restructuring agreements with creditors. This process is especially suitable for companies facing liquidity crises but deemed to have a potential for recovery.

STX explained that if the court accepts the application and issues a “comprehensive injunction,” the company will be protected from individual creditor claims through asset seizures or lawsuits for a certain period. This effectively creates a safeguard that enables the company to focus on complex stakeholder negotiations and the development of a recovery plan while maintaining core business operations.

Once proud of its global trade network, STX’s financial structure deteriorated sharply in the 2010s due to poor management of its main subsidiaries in shipbuilding and shipping. Since then, the company has experienced fluctuations. Although recent efforts have aimed at turning losses into profits and selling some assets, internal control issues led to sanctions from the Financial Services Commission, shaking market trust once again.

This move is interpreted as STX’s attempt to seek business restructuring within the legal restructuring framework. However, from the acceptance of the application to the implementation of an actual recovery plan through negotiations between the court and creditors, it may still take a considerable amount of time. The key factors for STX’s future trajectory will be the types of business restructuring plans proposed during the recovery process and whether market trust can be restored.