South Korea’s Winia Electronics and subsidiary, Winia Electronics Manufacturing have filed for court receivership as they grapple with financial difficulties.

According to sources on Thursday, Winia Electronics initiated the corporate rehabilitation process by filing for receivership with a bankruptcy court on September 20, a day ahead of Winia Electronics Manufacturing.

Winia Electronics, formerly known as Daewoo Electronics, was acquired by Dayou Winia Group in 2018. After the acquisition, Winia Electronics managed to turn a profit but encountered financial difficulties due to the Covid-19 pandemic and the challenges persisted despite the company’s self-rescue efforts, including the sale of its factory in Tianjin, China, in February 2023. The ongoing financial troubles also prevented the company from paying salaries and severance packages to its employees, leading to the CEO of Winia Electronics being placed under court custody on September 20. Winia Electronics is also embroiled in a lawsuit with Iran’s Dayyani family over past sales receivables.

To support the financial restructuring of its subsidiaries, Dayou Winia Group Chairman Park Young-woo injected 3.5 billion won ($2.61 million) out of pocket earlier in September. Park and Dayou Holdings purchased a 9 billion won stake in Winia held by Dayou A-Tech on September 18, with Park contributing 3.5 billion won and Dayou Holdings covering the remaining 5.5 billion won.

Despite all this, Dayou Winia Group is actively working on an extensive financial restructuring plan. On September 13, Dayou A-Tech revealed its plan to carry out a capital decrease to merge three shares into one, a move aimed at improving its financial structure.

By Choi Seung-jin, Cho Yun-hee, and Minu Kim

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