JTBC Headquarters [Provided by JTBC]

The case concerning the applications for commencement of rehabilitation procedures by JoongAng Group affiliates, including the financially distressed comprehensive programming channel JTBC, and its subsidiaries has been assigned to a panel of judges at the Seoul Rehabilitation Court presided over by the chief judge.

According to legal circles on the 15th, the Seoul Rehabilitation Court assigned the applications for commencement of rehabilitation procedures from JoongAng Group's holding company, JoongAng Holdings, as well as JTBC, Contentree JoongAng [036420], Megabox JoongAng, and JoongAng P&I to the Second Rehabilitation Division (presided over by Chief Judge Jeong Jun-yeong).

While separate case numbers were assigned to each company's rehabilitation application, they were grouped under a single panel of judges for consolidated review.

The panel is expected to schedule a hearing for the examination of representatives in the near future. The Debtor Rehabilitation and Bankruptcy Act stipulates that the court must examine the debtor or its representative when a rehabilitation application is filed.

On the 12th, JTBC declared a default after failing to repay maturing secured loans totaling 20.6 billion won.

This was due to a significant contraction in the TV broadcasting advertising market amid rapid changes in the media landscape, driven by digital transformation and over-the-top (OTT) services.

Two days after the default declaration, on the 14th, JoongAng Holdings, Contentree JoongAng, JoongAng P&I, and Megabox JoongAng filed for commencement of rehabilitation procedures. JTBC also submitted an additional rehabilitation application on the same day.

JoongAng Holdings and Contentree JoongAng also applied for preservation orders and comprehensive prohibitory injunctions.

A preservation order prevents the company from disposing of assets in a way that unfairly favors specific creditors, while a comprehensive prohibitory injunction, conversely, freezes creditors' claims to prevent them from securing the company's key assets through compulsory enforcement, provisional attachment, or auction before the commencement of corporate rehabilitation.

Domestic credit rating agencies uniformly lowered the credit ratings of JTBC immediately after its default.

Korea Investors Service [034950] downgraded JTBC's unsecured corporate bond rating from C to D on the same day.

The credit ratings for commercial paper and electronic short-term bonds were also lowered from C to D, respectively.

NICE Investors Service lowered JTBC's unsecured corporate bond rating from CCC to D and its short-term credit rating from C to D.

A credit rating of D indicates a state of default where principal or interest payments are impossible.

Korea Investors Service and NICE Investors Service cited JTBC's application for commencement of corporate rehabilitation proceedings at the Seoul Rehabilitation Court on the same day as the reason for these adjustments.

Korea Ratings simultaneously lowered the credit ratings for commercial paper and electronic short-term bonds of Megabox JoongAng, SLL JoongAng, and Contentree JoongAng.

Megabox JoongAng and Contentree JoongAng were downgraded from B to C, and SLL JoongAng from B to B-. These companies were also placed on a rating watch list (under review for downgrade).

The credit rating of JoongAng Ilbo, the parent company of JoongAng Group, also declined.

Korea Investors Service downgraded JoongAng Ilbo's unsecured corporate bond rating from BB+ to B- and placed it under negative outlook review. The credit ratings for commercial paper and electronic short-term bonds were lowered from B+ to C.

The rationale for these rating assessments cited the increased business and financial uncertainties due to the realization of liquidity risk within the group, emphasizing the need for monitoring liquidity response trends.

Korea Ratings lowered JoongAng Ilbo's unsecured corporate bond rating from BB to B and included it on the rating watch list (under review for downgrade).