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. Last Updated: 07/27/2016

SK Global Chairman Throws In the Towel

NEW YORK -- The chairman of SK Global, the trading company whose troubles led to South Korea's worst financial scandal in nearly four years, resigned Sunday under pressure from creditors eager to give it a new image while rescuing it from bankruptcy.

The resignation of Son Kil Seung, one of 10 executives of SK Group who were convicted of fraud after SK Global misstated its earnings for 2001 by $1.2 billion, goes only part of the way, however, to meeting demands of foreign investors and creditors for a management shake-up.

Son remains chairman of SK Group, South Korea's third-largest conglomerate, and also continues as chairman of the powerful Federation of Korean Industries.

Son resigned from both the chairmanship and board of SK Global, the trading firm for SK Group, in the midst of a battle for final approval of a plan that calls for creditors to write off about $3 billion of its debt at 43 percent of its value.

Bhang Ji Man, a spokesman for the SK Group, said Son's resignation would enable SK Global to make a fresh start before creditors met today to appoint a new chairman and board members.

Foreign creditors, to whom SK Global owes more than $750 million, reluctantly agreed to the plan on July 30 after SK Global's Korean creditors, led by Hana Bank, voted to apply for court receivership if the plan was not approved.

Receivership would have placed the company in bankruptcy, relieving it of responsibility to pay off its debts, now estimated at over $9 billion, while creditors restructured and possibly closed the company.

The plan still faces opposition from some foreign creditors as well as foreign investors, notably Sovereign Asset Management, the largest shareholder in SK Corporation, which owns 38 percent of the shares in SK Global. SK Global distributes gasoline and other oil products for SK Corporation, Korea's biggest oil refiner.

SK Global's Korean creditors have said it is essential for the SK Corporation to write off some $800 million that it had extended as credit to SK Global in return for still more equity.