In a significant development, Bookplus, the book wholesale and retail company established by Jeon Jae-guk, the eldest son of Chun Doo-hwan, is facing liquidity issues. According to the Korean Publishers Association, Jo Jeong-haeng, the representative of Bookplus, announced at briefings on February 14 and 18 that the company’s cash flow has deteriorated due to the seizure of the main transaction account of its largest shareholder, Mr. A, rendering it unable to conduct normal payments.
Although Bookplus managed to avoid a default by settling a one million won promissory note that matured on February 13, there are concerns about the 118 promissory notes, valued at about 450 million won, due between February 20 and the end of April. There are also reports of potential additional liabilities, and with the total exposure yet to be accurately assessed, there is a worry that, in the worst-case scenario, publishing partners might not recover their funds, leading to a chain of bankruptcies.
Bookplus is the fourth-largest wholesaler following Kyobo Book Centre, Woongjin Books, and the Korean Publishing Cooperative, implying potential significant impacts on the publishers that supply books to Bookplus. However, it’s noted that Bookplus’s asset value is 18.95 billion won, which is 3.34 billion won more than its liabilities of 15.66 billion won, suggesting a relatively low-risk factor.
Jo stated that if a normal resolution process is adhered to, publishers should not incur losses, and in the event of arising unpaid debts through book clearances, they plan to offset the liabilities by selling their subsidiary, The Book Center, which is a wholly-owned subsidiary of Bookplus.
In an effort to resolve its financial difficulties, Jo revealed plans to reorganize their wholesale business division within six months. In an interview with Yonhap News, he mentioned exploring various solutions to prevent damage to the publishers, hoping to set a clearer direction by around March as the situation continues to evolve.
Do Jin-ho, chairman of the Distribution Policy Committee of the Korean Publishers Association, views the situation positively, noting that unlike many companies with unexpected liabilities, Bookplus has no loans in the logistics sector, with the publisher’s account and future employee severance payments being the only liabilities.
Nevertheless, uncertainties remain regarding the exact number of book returns from bookstores, potential uncollected debts from closures or fictitious transactions, and the time required for the return and settlement processes. There are also concerns about the time needed to liquidate assets, potentially affecting the resolution of maturing promissory notes, and ongoing shareholder disputes which compound the negative factors.
Founded by Jeon Jae-guk in 1998, Bookplus saw its major shareholder become Mr. A in 2019 after a series of equity sales. However, with supportive shares combined, Jeon Jae-guk holds a higher percentage of the equity, resulting in legal disputes over various company rights. Based on 2023 audit report data, Mr. A holds a 32.43% stake, Libro 26.07%, and Jeon Jae-guk 19.71%, who is the primary shareholder of the bookstore Libro.