April 20, 2024

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[THE INVESTOR] A local court on May 31 decided to place Caffe Bene, a Korean coffee franchise operator, under court receivership.

The ruling came after Caffe Bene filed for court receivership in January as its debt reached over 55.6 billion won (US$51.60 million).

The court’s decision was based on Seil Accounting Corporation’s due diligence results, which showed that the company’s going concern value is around 41 billion won, exceeding its liquidation value of 16.1 billion won.

“We aim to end the court receivership earlier than planned by improving the performance of our franchising outlets,” a Caffe Bene official said in a statement, adding that the firm will revise its business strategy and form an efficient management system.

Caffe Bene, established by Kim Sun-kwon in 2008, once had over 1,000 stores back in 2012. In 2014, the company even established its own coffee bean roasting factory in Yangju, Gyeonggi Province.

However, the rapid growth was soon challenged by market saturation. In early 2016, Kim decided to sell the company to private equity firms including K3 Equity Partners and Food Empire Group after posting losses. However, it has continued to lose money, with sales during the first quarter this year reaching 6.27 billion won while its operating loss was 510 million won.

By Song Seung-hyun (ssh@heraldcorp.com)