Posted 12/27/2023, 9:26:53 AM
Construction Firms Saddle Banks with $16.9B in Liabilities as Market Downturn Sparks Bankruptcies
- Korea's major construction companies have over 22 trillion won ($16.9 billion) in contingent liabilities associated with real estate project financing (PF)
- Current economic conditions have heightened concerns these liabilities could become a bigger financial bomb
- Developers borrowed money for projects with the projects' success as collateral; if projects fail, creditors hold liability as debt
- Financial institutions are reducing lending to developers due to downturn in real estate market
- 19 construction companies filed for bankruptcy Jan-Dec this year, highest since 2020, sparking calls for government intervention