A Megabox branch in Seoul on May 30 last year. Yonhap News Agency

As Megabox JoongAng entered rehabilitation proceedings and concern grew that settlement payments for May and part of June may not be remitted for the time being, distributors called for countermeasures. There are worries that if the monies that should be distributed via distributors to production companies, importers, and publicity and marketing firms are blocked at the theater stage, the industry as a whole will face a cash crunch.

On the 7th, Film Professionals Solidarity urged government authorities and Megabox JoongAng “the issue of unpaid settlements is becoming a significant source of instability on the front lines of the film industry,” and “protective measures for the settlement claims of production, import, and distribution companies and of outsourced exhibition operators must be prepared within the rehabilitation process,” it said. Film Professionals Solidarity consists of 15 film-related organizations, including the Korean Film Directors Association.

Previously, on the 16th of last month, Megabox JoongAng informed each distributor that “unpaid claims accrued up to June 14, the date on which it applied to the court to commence rehabilitation proceedings, fall under rehabilitation claims and are scheduled to be repaid under a future rehabilitation plan,” and that “claims arising from June 15 will be paid in the ordinary course upon obtaining comprehensive authorization from the court.” Film Professionals Solidarity also stated that Megabox JoongAng asked distributors to “issue tax invoices for the June settlements by classifying settlement amounts from June 1 to 14 as rehabilitation claims and those from the 15th to the 30th as public-interest claims.”

Film Professionals Solidarity stated that it is “not a simple matter of claims between individual distributors and Megabox JoongAng, but an issue directly connected to the production, distribution, and exhibition cycle of the film industry,” and that “a responsible rehabilitation process and a public response that minimizes harm to the industrial community are needed.” If settlements are blocked, importers, investors, publicity and marketing firms, post-production companies, technical companies, advertising and event companies, and staff costs will also be affected in succession. The smaller the company, the greater the likelihood it will struggle to continue operating.

Industry members said, “Please take into account that settlement claims are commercial settlement claims that constitute the circulation structure of the film industry,” and “(in particular) separate protective measures should be considered for micro and small to medium-sized film businesses that suffer heavy damage.”

It asked government authorities to “provide legal and accounting consultations so that affected firms do not suffer disadvantages in claim filings and the exercise of rights within the rehabilitation process, and to review ways to secure emergency liquidity and link related support.”