One of Korea’s oldest iconic footwear maker Hwaseung has filed for court receivership at Seoul Bankruptcy Court, according to industry sources on Feb. 7.
The court on Feb. 1 ordered the automatic stay to halt debt collection efforts and other insolvency proceedings.
A promotional image of Lecaf running shoes
Founded in 1953, Hwaseung rose to popularity with homegrown sportswear brand Lecaf in 1980s. It also owns distribution rights for US tennis brand K-Swiss and US footwear brand Merrel. Its heydays ended in the wake of an influx of overseas sports brands here such as Nike and Adidas.
Since 2015, Hwaseung has been wholly owned by a private equity fund jointly managed by the state-owned Korea Development Bank and KTB Private Equity.
The 246.3 billion won (US$218.97 million) PEF received investments from Hwaseung Group’s affiliates including de facto holding company Hwaseung R&A, as well as NongHyup and Hyundai Marine & Fire Insurance. KDB and KTB Private Equity both invested some 20 billion won.
Hwaseung slipped into the red, despite the PEF takeover from Hwaseung Group and farming machine maker Kyung-Il. It posted a 15.1 billion won operating loss in 2017, a sharp contrast with a 15.5 billion won operating profit in 2014.
By Son Ji-hyoung (firstname.lastname@example.org)