JTBC enters court-led rehabilitation process

The Seoul Rehabilitation Court has officially decided to begin a corporate rehabilitation process for the comprehensive programming channel JTBC. This decision follows the termination of the company's voluntary debt restructuring support program.

The court cited several reasons for JTBC's financial difficulties. These include the rapid growth of platforms like OTT (Over-The-Top) services both domestically and internationally post-COVID-19, leading to a continuous rise in production costs such as talent fees and personnel expenses. Additionally, the contraction of the broadcast advertising market due to increased digital advertising and declining viewership, coupled with significant expenditures for Olympic broadcasting rights, have contributed to the financial strain. A broader liquidity crisis within the parent JoongAng Group also played a role.

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The reasons for the financial breakdown include the rapid growth of domestic and international OTT platforms after COVID-19, continuous increases in production costs such as talent fees and personnel expenses, the shrinking broadcast advertising market due to the increase in digital advertising and decrease in viewership, and the occurrence of large expenditures concentrated in a short period due to the payment of Olympic broadcasting rights, and the overall liquidity crisis of the JoongAng Group.

While JTBC will now operate under court supervision to discuss a rehabilitation plan, the court has decided not to appoint a separate administrator. The current management structure will be maintained, though the court warned that management could be replaced if any culpability is discovered.

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However, the management may be replaced in the future if the current management's culpability is revealed.

The next steps involve JTBC negotiating with a creditors' council, composed of major creditors, to formulate a rehabilitation plan. The deadline for submitting the creditors' list is October 8, with the period for reporting claims running until November 6. JTBC is required to submit its rehabilitation plan by January 29, 2025. Following a vote by stakeholders, if the plan is adopted, JTBC will proceed with debt repayment.

This development comes after JTBC defaulted on a 20.6 billion won loan repayment on June 12, signaling its financial distress. The company had previously sought voluntary debt restructuring before this formal court-led process began.

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Creditors and stakeholders who have claims must check whether the existence and amount of their claims are accurately recorded in the submitted list of creditors.