Eastar Jet (ZE, Seoul Gimpo) has been granted a preservation measure and a comprehensive prohibition order, two parts of a procedure that is a form of corporate insolvency providing protection from creditors under Korean law, local media reported on January 15.
Seoul Bankruptcy Court's decision, which came just one day after Easter Jet confirmed it had filed for court receivership to find a new investor, paves the way for the AOC-less and near-bankrupt budget carrier to be "rehabilitated" and sold.
The orders prevent creditors from seizing or selling off Eastar Jet's assets, and also freeze all bonds, in preparation for the start of the rehabilitation proceedings, which the court said would begin by the end of next week, according to KBS World Radio.
As previously reported, Eastar Jet said earlier this week that it planned to file for court receivership by the end of January in a final effort to lure an investor. One step short of bankruptcy in South Korea, receivership gives a court power to decide whether a company can be saved and, if so, how.
The company duly filed for receivership on January 14, the court confirmed. The court emphasised that Eastar Jet wanted to find a way to continue its air transport business via a merger or acquisition. It highlighted that it would seek ways "to utilise Eastar Jet's expertise and know-how through M&A" in consideration of the fact that the company had already reduced its costs through personnel reductions and the disposal of aircraft.
The court noted that the presiding judge in the Eastar Jet case, Kim Chang-kwon, had already overseen earlier prominent rehabilitation procedures, such as Sungdong Shipbuilding & Marine Engineering, which was later successfully sold in late December 2019.
