An analysis showed that if the debt-ridden Daewoo Shipbuilding & Marine Engineering goes bankrupt, its liquidation value is estimated at only 5.6 trillion won. The liquidation value is equivalent to about a third of the book value of its assets which was estimated at more than 15 trillion won.
The shipyard has debts of 21.5 trillion won owed to its creditors, including commercial banks. If the shipbuilder goes bankrupt, its creditors could suffer a loss of up to 80 percent of their loans.
Based on an audit report prepared by Samjong KPMG, the Korean government and Korea Development Bank measured the size of losses based on future scenarios.
If Daewoo's creditors participate in a debt-for-equity swap and rollover plan, the financial service industry could recoup their bonds of up to 53.2 percent. However, if the company is placed under a short-term court receivership, the amount of the bonds the industry can recover is lowered to 43.4 percent. If the shipyard goes bankrupt, the rate is lowered further to 23.7 percent.