by REERA YOO
South Korean phone maker Pantech Co. sought bankruptcy protection in the U.S. Thursday after its flagship smartphone tanked in the mobile device market, which is dominated by tech giants Samsung, LG, and Apple.
According to the Wall Street Journal, Pantech filed for Chapter 15 — the section of the Bankruptcy Code that protects foreign companies from U.S. lawsuits while they restructure overseas — at the U.S. Bankruptcy Court in Atlanta. The company listed total assets of as much as $500 million and debts of as much as $1 billion in its petition.
In August, Pantech filed for court receivership in South Korea after it had racked up $961 million in debt at the end of its first quarter. Until last year, Pantech was South Korea’s third largest smartphone manufacturer after Samsung and LG, but the company’s sales plummeted due to a 45-day ban imposed earlier this year by the Korea Communications Commission as part of a government crackdown on excessive handset subsidies.
Pantech also relies heavily on sales in South Korean market, where it faces a saturated market and intense competition. Last year, South Korea’s smartphone penetration rate reached 73 percent, causing domestic sales to slow considerably. Even Samsung, the world’s largest smartphone maker, suffered from market saturation as its third-quarter operating profit dropped by nearly 60 percent.
According to Bloomberg, Pantech submitted a debt workout plan to its South Korean creditors in March and started a receivership program in August. A judge has yet to be assigned to their Chapter 15 case.
Photo courtesy of Koogle TV
