South Korea's ailing builder in Libya goes bankrupt
A South Korean court Friday, March 9, pulled the plug on ailing Dong-Ah Engineering and Construction Co. Ltd, a lead contractor on an ambitious project to build a canal across the Libyan desert. "The court has decided to end court receivership for Dong-Ah," the Seoul district court's bankruptcy division said in a ruling.
The firm had sought to stay afloat under court protection since collapsing under a debt of some three billion dollars last year but with the ruling was virtually being forced into liquidation. Court officials said the failed civil engineering firm has two weeks to appeal the ruling, failing which it will be declared bankrupt. Observers said a higher court would be unlikely to accept any appeal.
The lower court's ruling was based on an audit of Dong-Ah's assets and liabilities, which concluded that creditors' interests would be best served by liquidating the company rather than keeping it afloat. The court defended its verdict classifying Dong-Ah as non-viable, explaining it was unavoidable.
Dong-Ah's demise has clouded the future of many of its international building contracts, notably the huge man-made waterway project in Libya. Libya's Great Man-made River Authority had warned that it would claim damages against the Seoul government for any delay in the project.
Seoul fears Dong-Ah's failure may undermine the country's credit and develop into a diplomatic feud with Libya. The South Korean government has assured Libya it will help the firm complete the Libyan project even if it is put into liquidation.
Dong-Ah said it had completed 98 percent of the work on the first two stages of the waterway. The Libyan man-made irrigation canal, one of the world's largest civil engineering projects, is being built in five stages.
Dong Ah had been under a government-enforced rescue debt-rehabilitation program since it fell victim to South Korea's economic crisis in 1998. — (AFP, Seoul)
© Agence France Presse 2001
© 2001 Mena Report (www.menareport.com)