The Seoul Bankruptcy Court recently issued a bankruptcy declaration for Delio, a South Korean virtual asset deposit platform. This case (2024Hahap100231) carries substantial implications for creditors, including a significant number of foreign nationals, who are now required to file their claims to protect their rights during the bankruptcy proceedings.

Overview of the Case

Delio, founded in 2018 with the aim of developing blockchain systems, operated a business model that generated profits by managing virtual assets deposited by clients and paying interest in virtual assets.  However, following the collapse of the U.S. cryptocurrency exchange FTX in November 2022, Delio suspended withdrawals on June 14, 2023.  Its representative is currently on trial for allegedly embezzling approximately 250 billion won in virtual assets from around 2,800 victims over a two-year period.  Delio subsequently filed for rehabilitation with the Seoul Bankruptcy Court, but the application was dismissed.  Instead, the court declared bankruptcy on November 22, 2024.

Now the court-appointed bankruptcy administrator has emphasized that all creditors must file their claims to timely ensure their inclusion in the legal proceedings.

Bankruptcy Filing Process Under Korean Law

Bankruptcy proceedings in Korea involve several key steps:

1. Document Preparation: Creditors must compile evidence supporting their claims, such as account statements and correspondence with the debtor.

2. Submission of Creditor’s Claim: Claims must be filed with Seoul Bankruptcy Court either in person, by mail, or electronically via the Korean Electronic Litigation System.

3. Verification and Meeting: Once filed, the court reviews the claims, and creditors can attend a creditors’ meeting at Seoul Bankruptcy Court.

4. Asset Investigation and Distribution: The bankruptcy administrator investigates, recovers, and liquidates the debtor’s assets. If distributable assets are available, they are allocated according to the priority of claims or, for claims of equal priority, proportionally based on the amount of the claim.

Failure to adhere to these deadlines or submit proper documentation could result in exclusion from the proceedings. 

Our Legal Services

Foreign creditors may face additional challenges due to language barriers and the complexities of Korean bankruptcy law.  Our legal team is uniquely positioned to assist foreign creditors with filing their bankruptcy claims in compliance with Korean bankruptcy law. We offer:

• Initial Consultation: Reviewing documentation and assessing the validity of your claim.

• Filing Creditor’s Claim to Seoul Bankruptcy Court: Ensuring all necessary documents are prepared, and filed accurately and on time.

• Court Representation (Optional): Acting as your legal representative during the entire bankruptcy proceedings, advising on the recovery process and your rights as a creditor. This includes attending the creditors’ meeting on your behalf, if necessary.

While the bankruptcy administrator could provide basic guidance, professional legal support can ensure your claim is filed correctly and maximizes your chances of recovery.

Deadlines to Remember

• Claim Filing Deadline: February 21, 2025

• Creditors’ Meeting: March 19, 2025, at 2:00 PM, Seoul Bankruptcy Court

Conclusion

If you are a foreign creditor affected by Delio bankruptcy and need assistance navigating the claim process, our experienced team is here to help.  Contact us today for a consultation to discuss how we can support you in protecting your financial interests.

Disclaimer: This blog post is intended for informational purposes only and does not constitute legal advice. Please consult with a qualified attorney for advice specific to your situation.

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