South Korean Phone Maker Pantech Files Bankruptcy in U.S.Dawn McCarty
Pantech Co., the South Korean maker of mobile devices that’s facing fierce competition from Samsung Electronics Co., LG Electronics Inc. and Apple Inc., sought bankruptcy protection in the U.S. as it seeks to reorganize at home.
The company, incorporated in Seoul, listed debt of as much as $1 billion and assets of as much as $500 million in a filing yesterday in U.S. Bankruptcy Court in Atlanta. Chapter 15 protects foreign companies from U.S. lawsuits and creditor claims while they reorganize abroad.
Pantech asked the U.S. court to recognize the proceeding pending before the Seoul Central District, Third Bankruptcy Division as its “foreign main proceeding.” The company’s creditors agreed to put the company up for sale.
Sales “dropped due to intensifying competition among mobile device manufacturers and market saturation since 2012, and the dramatic drop of domestic sales due to business suspension imposed by Korea Communications Commission to the mobile carriers in March 2014 led to significant strain on cash flow,” Pantech Chief Executive Officer Joonwoo Lee said in court papers.
The company, established in 1991, engaged in mobile-phone manufacturing and sales. It went through a five-year debt restructuring in Korea and was released in December 2011.
The company in March submitted a debt workout plan to its creditors, and a receivership program was started in August. Nine lenders agreed to the plan.
Creditors include KDB, Woori Bank, Nonghyup Bank, Shinhan Bank, Daegu Bank, Hana Bank, Kookmin Bank, Export Import Bank of Korea, Korea Credit Guarantee Fund, according to a March e-mailed statement.
There are a total of 14 pending U.S. patent lawsuits against Pantech in Texas, California, Delaware and Florida, court papers show.
The case is In re Pantech Co. Ltd, 14-70482, U.S. Bankruptcy Court, Northern District of Georgia (Atlanta).