The South Korean government will keep up regular corporate checkup to take preemptive actions on troubled companies and broaden the options in mergers and acquisitions and reorganization.

The plan to push forward aggressive corporate restructuring was raised at a government ministerial meeting on Monday led by Deputy Prime Minister and Finance and Strategy Minister Yoo Il-ho

The government will carry out action plans arranged in September and October to enhance competitiveness of four economy-sensitive industries - shipbuilding, shipping, steel, and petrochemical - without delay and check up on other key industries such as construction and take preemptive measures if needed.

The government will have bank creditors to run permanent watch and management over companies with signs of insolvency risk or business deterioration. The government authority will examine restructuring progress quarterly based on analysis on corporate creditworthiness.

The government will also encourage voluntary mergers and acquisition activities in not only the manufacturing but also the service sector including construction, retail, and logistics, through the so-called One Shot Act or Corporate Vitality Enhancement Act that aims to provide corporations with tax incentives and simplify administrative M&A procedures. The government is expected to offer more practical benefits such as financial and tax support to a wider range of companies.

The government also would diversify court bankruptcy proceedings by allowing pre-packaged option that would allow troubled companies seek new funding from creditors if they have clear self-rescue plan to normalize business faster under court protection on debt obligations.

By Kim Se-woong

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