Long-term delinquent claims for more than 100,000 people held by Sangnoksu No.1 Asset Securitization Limited Company (Sangnoksu) and KB Star Asset Securitization Limited Company (KB Star) will be sold to the New Leap Fund on the 29th.

The private bad bank ‘Sangnoksu’, criticized for charging high interest over long periods, conducting hardline collections, and excluding borrowers from write-offs of long-term delinquent claims, will hold a general meeting of members on the 8th to approve a plan to sell long-term delinquent claims, and will execute a claims sale contract with the New Leap Fund on the 29th.

Under its articles of incorporation, Sangnoksu must obtain unanimous consent from its nine investing companies (shareholders), including Shinhan Card and Hana Bank, to decide major items such as a sale of claims.

Among the claims of Sangnoksu that are eligible for sale to the New Leap Fund (unsecured claims overdue for 7 years or more, with principal under 50 million KRW) are 670 billion KRW in long-term delinquent claims held by about 86,000 borrowers. Claims in which the borrower has died and there is no right to demand, or where the statute of limitations is imminent, are also included, so the actual New Leap Fund purchase size is expected to be smaller than this.

KB Star, which last month expressed its intention to participate in the New Leap Fund, will also execute a claims sale contract with the New Leap Fund on the 29th. About 280 billion KRW in claims eligible for the New Leap Fund, held by around 17,000 borrowers, will be transferred to the New Leap Fund.

When long-term delinquent claims are sold to the New Leap Fund, without a separate application by the debtor, the debt will either be repaid in installments according to the repayment capacity of the borrower or, if repayment capacity is insufficient, the debt will be written off.

Other long-term delinquent claims of Sangnoksu that are not eligible for the New Leap Fund are also scheduled to be sold from the end of the third quarter to the beginning of the fourth quarter. This amounts to around 170 billion KRW held by about 24,000 borrowers.

At a Cabinet meeting held at the Blue House on the 2nd, President Lee Jae Myung said, “There is talk of moral hazard that says if you hold out without repaying, you will be forgiven, but it is impossible to endure for years after giving up economic activity, unable to find a job and even open an account,” and “Settlement of long-term delinquent debt must be carried out as forcefully and continuously as possible.”