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PC Cooling Specialist Zalman Goes Bankrupt Due To Fraud
An anonymous reader writes Zalman's parent company Moneual's CEO Harold Park, and vice presidents Scott Park and Won Duck-yeok, have apparently spent the last five years producing fraudulent documentation relating to the sales performance of Zalman. These documents inflated sales figures and export data for Zalman's products. The reason? Bank loans. By increasing sales and exports Park and his associates were able to secure bank loans totaling $2.98 billion. Someone has finally realized what has been going on, though, triggering Zalman's shares to be suspended on the stock market and the company filing for bankruptcy protection. The questions now turn to how this practice was allowed to continue unnoticed for so long and how the banks will go about getting their near $3 billion back.
I am familiar with US / western bankruptcy law. This is Korea so your mileage will vary.
First, the issue is one of finance, not operations. If that is true, that means the company is still viable – that is worth more as a operating entity than being sold off for parts. So it will probably keep on going.
Second, from a brief scan of the article, there are no allegations of fraud against Zalman. It is against Moneual, which owns 90% of Zalman's shares. It sounds like it is not the court seizing Zalman's assets, but freezing Moneual's assets.
Technically as a independent entity, Zalman should keep on ticking like it has. This assumes that Zalman did not assist Moneual's fraud. Since Moneual had a controlling interest in Zalman that is a big assumption that needs to be checked out. Probably another reason why the shares are frozen.
What happened was that the parent company Moneual, faked sales near $3 billion, NOT get that much loans. They secured loans of about $600 million with about $300 million insured. So the banks will have a loss of less than $300 million (probably near that amount). Also even though the parent company is definitely going bankrupt, Zalman will probably get a court order to keep running after the parent company forfeits all it shares.