The Financial Supervisory Service (FSS) has decided to complete the restructuring of real estate project financing (PF) projects by February next year, accelerating the disposal of non-performing projects.
According to financial sources on the 24th, the FSS recently issued a directive to all financial sectors to submit restructuring and liquidation plans by September 9th for all real estate PF evaluation target projects with a final business feasibility rating of "caution" or "potential insolvency."
The guidelines specify that the expected completion date for restructuring and liquidation should be set within 6 months from the date of plan submission. This indicates the intention to finalize the disposal of non-performing PF projects by February next year.
However, for projects entering auction or public sale for the first time, the procedure may be completed by April next year, considering the time required for administrative procedures such as determining the appraisal value for public sale and providing prior notice. The first bid for public sale should start within 2 months of submitting the plan.
According to the guidelines, projects with a "caution" rating should submit plans for business restructuring or voluntary sale, while those with a "potential insolvency" rating should submit plans for write-off or sale through auction or public sale.
As of the end of last month, if the principal and interest of a real estate PF loan are overdue for more than 3 months, auction or public sale procedures must be initiated immediately. Previously, projects were subject to auction or public sale only after 6 months of delinquency.
Furthermore, the auction period is set within 1 month, and if the auction fails, it must be re-auctioned within 1 month. The final completion target date should be set within 6 months from the start of the auction or public sale. Considering that the previous re-auction period after a failed auction was 3 months, the target projects and timeline for auction and public sale have been significantly shortened.
The auction price cannot be set at the previous failed auction price during re-bidding.
For projects subject to write-off, it is necessary to state whether other possible recovery methods such as voluntary or compulsory auction were attempted before proceeding with the write-off, and the reasons for determining that recovery is impossible based on the financial situation and solvency of the debtor.
Additionally, the FSS has requested that if the write-off process is delayed beyond the end of the third quarter, specific reasons should be provided.
Restructuring plans should be submitted in detail, categorized into additional funding, change of business purpose, change of constructor, and restructuring of financial structure.
After receiving restructuring and liquidation plans from all financial sectors, the FSS plans to conduct on-site inspections and interviews with management from September 19th if any deficiencies are found.
Earlier, the financial authorities received business feasibility assessment results from all financial sectors by July 5th, based on stricter and more detailed 4-level evaluation criteria (good, normal, caution, potential insolvency). They have been conducting on-site inspections and interviews with management of financial companies that conducted inadequate business feasibility assessments.
https://www.sankyungtoday.com/news/articleView.html?idxno=47285
Non-performing PF restructuring to be expedited... FSS sets deadline for February next year
The Financial Supervisory Service (FSS) has decided to complete the restructuring of real estate project financing (PF) projects by February next year, acceler
www.sankyungtoday.com
