Bankruptcy petitions against KOSDAQ firms end in a bankruptcy ruling about 3% of the time

Four grants and 119 dismissals make 123 disclosed outcomes, so eight of the 131 filings had no reported decision by the end of August ^[14]. The Seoul Economic Daily attributes the gap to the lag between a filing and a ruling ^[5]. On the decided cases alone, petitioners obtained a bankruptcy declaration about 3.3% of the time, and dismissals outnumbered grants by roughly 30 to one ^[15][16].

Filings are also thinning out. Six were disclosed last year and five in the first eight months of this one ^[17][7]. From 2016 through 2024 the average was about 13 a year ^[18]. None of the 11 disclosed since the start of last year has produced a bankruptcy declaration ^[6].

The cost comes before the ruling. KOSDAQ shares can be suspended once a petition is confirmed, or while the exchange checks a market rumor of one, a step meant to protect investors while information is verified ^[8]. The trigger is that a petition exists; its merits wait for a court ^[8]. MGen Solutions was halted from midway through the 16th of last month until the 18th ^[10]. Its creditors withdrew after the company agreed to repay its convertible bonds in full, and the petition and its dismissal were disclosed on the same day ^[10]. Optron-Tec's shares fell to a 52-week low on the first trading day after it disclosed a petition in January last year ^[9]. The petitioner's 2 billion won claim arose from an agreement with the former chief executive, and the court dismissed it because the company was not the debtor ^[9].

The exchange's exception costs the full claim. KRX can keep a petitioned company off its list of administratively designated issues by weighing factors such as whether the claimed amount has been deposited with the court in full and whether the filing is an abuse of rights ^[11]. The deposit route means raising the entire amount ^[11]. For a claim the size of Optron-Tec's, the deposit would be 2 billion won, set aside against a debt the court later found was not the company's ^[19].

A grant rate near 3% fits more than one explanation. If most dismissals are rejections on the merits, as at Optron-Tec, a petition is a way to knock down a share price and freeze trading without winning anything in court. If many are withdrawals after payment, as at MGen, the petition worked as a collection tool for creditors who were owed money. The 58 targets, petitioned 2.3 times each on average, could also be companies under real strain with a queue of unpaid creditors ^[3]. The KRX figures, as reported, do not separate rulings on the merits from filings dropped after a settlement. The newspaper itself notes that a dismissal alone does not prove abuse ^[13].

We think the evidence supports the narrower claim. A petition against a KOSDAQ company mostly works as pressure, whoever files it, and the exchange's rules put the cost of that pressure on ordinary shareholders outside the dispute ^[8][10]. Whether the pressure is abusive depends on a split the data do not show. The view would be wrong if the repeatedly petitioned companies went on to fail anyway after their petitions were dismissed.

Han Min-soo, the Democratic Party lawmaker whose office obtained the figures from KRX, did not propose a specific rule in the remarks the newspaper reported ^[1]. "We need to consider safeguards that protect the right of legitimate creditors to file while reducing the burden placed on companies and ordinary shareholders before courts rule," Han said ^[12].