In a dramatic u-turn, South Korea’s cash-strapped shipbuilder STX Offshore & Shipbuilding Co. avoided falling under a bankruptcy court after its main creditor Korea Development Bank (KDB) on Wednesday accepted the company’s delayed self-rescue plan.

The state-run lender held off its decision to refer the shipbuilder to the bankruptcy court this week after outside experts including its auditor found the self-rescue scheme plausible.

The troubled shipyard was re-headed towards court receivership nine months after exiting the court-led restructuring in July 2017 after the union vehemently resisted creditors’ demand for shedding labor costs by 75 percent to bring down fixed costs by 40 percent.

Creditors said on Tuesday they were set to file for court receivership as the company failed to submit the union-signed rescue plan by the Monday-deadline. They threatened not to issue refund guarantee (RG) on new ship orders, which is a must for a shipbuilder to win orders, if the union does not sign off to the restructuring scheme.

In the revised scheme, the union offered to cut wages and go on a rotating unpaid leave to reduce labor cost instead of layoffs. The shipyard will sell off idle properties while working harder to draw new work.

The KDB in return offered to issue RGs on orders won at profitable level, but warned it would abandon the company if its restructuring and turnaround plans do not pan out as hoped.

By Lee Seung-yoon and Choi Mira

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]