The domestic real estate development market is going through a dark period. Since last year, Korea has experienced a sharp increase in construction costs, inflation, and rising lending rates due to the dramatic increase in the key interest rate caused by the war in Ukraine. In addition, the recent Legoland debacle has caused a credit crunch for asset-backed commercial papers (ABCP), which are mainly used for project financing, and even the Dunchon Jugong Apartment redevelopment project, one of Korea’s representative urban renewal projects, is reported to have a financing rate of 12 percent, and news of bankruptcy of local construction companies continue to reach our ears.

Such an impact not only affects the procurement market, but is likely to spread to the entire construction industry, along with a short-term liquidity crunch that can drive even the most profitable companies into bankruptcy. What’s more, the slowdown in the sale of housing units and the fall in real estate prices can lead to a crisis in the real estate market, and such signs of crisis can be seen in many parts of the related industry. Recent announcements made by the U.S. Federal Reserve suggest that U.S. inflation is expected to stabilize in the second half of next year, and in light of these developments, managing and responding to risk will be the key issue in the real estate market for at least another year or so.

Under the above circumstances, Barun Law LLC has organized the Real Estate PF Financial Crisis Response Team to analyze and diagnose the situation faced by various parties, propose solutions, and play a role as a partner that helps overcome the relevant crisis by minimizing risks through quick and reasonable decision-making processes in crisis situations. In order to provide quick solutions for construction companies who bear the greatest burden of risk, Barun Law held a webinar on Risk Management Strategies for Construction Companies Utilizing PF Loans in December 2022. Due to continued interest, Barun held a follow-up webinar on Risk Management Strategies for Developers Utilizing PF Loans in March 2023. Barun Law plans to continue organizing a series of seminars to provide response measures for each party, hoping to help each party overcome the crisis by presenting response measures and ways to utilize various systems and programs provided under recent laws.

Analysis and Diagnosis of PF Projects
- Analyzing and conducting due diligence on properties and businesses to be subject to potential PF projects
- Analyzing and diagnosing the progress, contractual relationship, rights relationship with respect to ongoing PF projects
- Analyzing disputes on PF projects based on related contracts and laws and presenting response measures

Solutions for Normalization of PF Projects
- Providing comprehensive solutions based on the analysis of businesses utilizing PF loans
- Providing customized solutions for each party
- Providing practical solutions based on the progress or details of the business or rights relationship

Advice on Acquisition and Enforcement of Development Rights
- Preparing strategies and response measures for acquisition of development rights
- Advising on specific acquisition procedures in accordance with the type of development to be acquired (permits, status of consignors, name of owner, right to receive payment for sale, deposits)
- Advising developers on obtaining control, such as executing stock pledges, exercising shareholder rights under a blanket proxy, establishing a bridge developer, etc.
- Preparing strategies to respond to contingent liabilities following the acquisition of development right and advising on tax matters
- Responding to related lawsuits and preliminary injunctions

Additional Claim for Construction Payment, Disputes on Means of Attainment
- Preparing strategies on ranking construction payments of a business utilizing PF loans
- Disputes on additional construction payment
- Disputes over a construction company’s lien, claim for creation of kun-mortgage, and payment guarantee for construction payments
- Dispute on construction payment among joint recipients

Advice on Corporate Workout, Corporate Rehabilitation, Restructuring and M&A Involving Construction Companies
- Analyzing the legal relationship concerning the initiation of corporate reorganization and restructuring of a construction company
- Advising on restructuring (liquidation of assets) and the M&A of a construction company
- Advising on the change of the construction company

Advice on Completion Guarantee, Guarantee of Sale, and Assumption of Obligation
- Advising on the completion guarantee obligation (concerning the details of the obligation, method to fulfill the obligation, the other party, etc.)
- Advising on whether the client is subject to completion guarantee obligation (assessed the date on which the completion guarantee obligation arose)
- Advising on the effect of non-fulfillment of the completion guarantee obligation (relationship between the acquirer of the obligation and the funder, whether the right to indemnity arose, etc.)
- Advising on the response measures to take after fulfillment or non-fulfillment of the completion guarantee obligation
- Advising on the guarantee of sale agreement and the fulfillment thereof
- Advising on the effect of guarantee of sale
- Advising on the legal relationship concerning the guarantee of sale
- Advising on acquisition of obligations, agreements on the provision of security for damages, joint and several liability, supplementation of funds, etc.
- Advising on the relationship between co-existing responsibilities
- Advising on the legal relationship in the case of fulfillment or non-fulfillment of an obligation
- Advising on collection of construction payment
- Advising on measures to collect additional construction payment
- Advising on payment collection measures in relation to rising costs
- Advising on moving into a building
- Advising on liens, delay penalties, delay of construction, etc.
- Advising on the drawdown of funds
- Advising on the response to drawdown of funds
- Advising on the dispute over the construction period and payment for the construction of a logistics center

Advice on Securitization of Unsold Property
- Advising on the strategies to sell unsold property
- Advising on the establishment of a fund for unsold property, real estate investment trust (REIT), and on the sale of unsold property
- Advising on the sale of specialized business sites, including golf courses, industrial complexes, memorial parks, etc.
- Advising on the public auction procedure and private contracts
- Responding to relevant preliminary injunctions

Advising on Trusts, etc.
- Advising on the types of trust, creation of trusts, and reviewing related agreements (security trust, managed land trust, agency agreements, etc.)
- Analyzing and reviewing the trustor of a fraudulent trust and the relationship of rights to the property subject to the trust
- Advising on the management of trust property and performing tasks related to the trust
- Advising on the public sale, disposition, and settlement of the trust property

Advice on Payment by Subrogation
- Analyzing EOD, risks of the occurrence of any grounds for payment by subrogation, and reviewing response measures
- Analyzing the funding structure for payment by subrogation and reviewing related agreements
- Obtaining security interest from payment by subrogation and advising on transfer of rights
- Advising on the exercise of the right to indemnity

Advice on the Sale and Purchase of Non-Performing Loans (NPLs)
- Analyzing the subject business, parties to the NPLs, and the relationship of the related rights
- Designing the appropriate sale/purchase and transfer process depending on the type of loan (i.e., whether collateral exists, whether rehabilitation is required, etc.)
- Designing, analyzing and advising on the funding structure of funds for purchase
- Reviewing related agreements

Advice on Real Estate Investment Companies
- Advising on the formation, licensing and operation of real estate investment companies
- Reviewing documents related to licensing, including the articles of incorporation, business plans, etc.
- Advising on the sale/purchase of real estate and financing of investment funds
- Advising on the management of real estate investment companies and handling the business affairs of asset management companies

Advice on Project Financing Vehicles (PFVs)
- Reviewing whether the client’s business is a PFV business
- Advising on the establishment of a PFV, including the conditions for designation as a PFV, shareholder composition, etc.
- Advising on the procurement of funds for PFV business
- Advising on the management of a PFC and handling the business affairs of asset management companies

Advice on Asset Securitization
-Designing securitization structure
- Preparing and reviewing agreements on securitization
- Advising on the issuance of securitized securities

Advice on Real Estate Funds
- Advising on the creation of real estate funds (investment companies, investment trusts, etc.)
- Advising asset management companies on fund management, and handling the business affairs and responsibilities of the selling company
- Reviewing and advising on the participation structure (loans, acquisition of shares, etc.) of the businesses to be invested in
- Responding to disputes with investors
- Responding to supervisory authorities

Project Financing for Urban Renewal Projects and Urban Development Projects
- Advising on project financing for urban renewal projects, including reconstruction, redevelopment and local development associations
- Advising on the process of approval process for project financing and the enforcement of all costs and their legality
- Making claims for repayment of loan and payment of business costs and advising on joint and several guarantee
- Analyzing the rights relationship concerning and area of land secured by the authorities for their business and advising on project financing for urban development projects
- Advising on the types of urban development projects (expropriation, use, replotting)
- Advising on the establishment of urban development project associations

Advice on Overseas Project Financing Projects
- Reviewing domestic and overseas licensing-related matters that are necessary when taking part in overseas project financing projects
- Reviewing matters concerning the funding structure and reporting of foreign currency
- Translating, preparing and reviewing relevant agreements
- Analyzing whether EOD will occur, the relationship of rights of the parties, and advising and representing clients with respect to the collection of loans

Analysis and Diagnosis concerning Project Financing Projects
- Analyzing the dispute over the trust agreement for the construction and sale of units in a resort complex in Uijeongbu
- Analyzing the dispute over the services related to the Seoul Resort Development Project
- Analyzing the dispute over the agreement for development of Mega City in Daeheung-dong, Daejeon-si
- Analyzing the dispute over the agreement concerning Munjeong Future Business District
- Analyzing the dispute over the development of Songdo Landmark City
- Analyzing the dispute over the development of a golf course in Cheonan-si

Provision of Solutions for Normalization of Project Financing Projects
- Advising on the dispute over the financial structure of the private investment infrastructure project concerning the Ilsan Bridge
- Advising on the dispute over the bidding process for the public selection of a private company to participate in the urban development project for the Han River riverside area in Guri-si
- Advising on the dispute over the development project of the complex facility site in Ilsan
- Advising on the dispute over the project on the creation of Gyeongnam Masan Robot Land, valued at approximately KRW 110 billion
- Resolving and advising on the dispute over the business rights to the public housing development project in Singal-dong, Yongin-si, valued at approximately KRW 265 billion

Advice on Acquisition and Execution of Enforcement Right
- Advising on the dispute over the urban development project in Sinheung-dong, Seongnam-si
- Advising on the dispute over the business agreement involving Metapolis in Hwaseong-si
- Advising on the dispute over the business performance agreement for the Hwaseong Dongtan District 2 Land Development Project
- Advising on the claim for payment of the agreement performance deposit concerning the development project of a commercial complex in Dongtan New Town

Disputes concerning Claims for Additional Construction Payment and Means to Secure Payment
- Advising on the wastewater treatment dispute and the Seoul Jungryang Water Recycling Center facility upgrade project
- Advising on additional construction payment for the construction of Incheon International Airport Terminal 2
- Advising on the dispute over the construction payment for the construction of Dream Tower in Jeju Island
- Advising a construction company on the exercise of its lien under the construction agreement following the trust company’s demand for delivery
- Advising on a dispute over the construction agreement for the construction of an apartment complex in Ulsan-si
- Advising on the dispute over the claim for reimbursement of costs in addition to construction payment for the public housing development project in Eumseong-gun, Chungcheongbuk-do

Advice on Corporate Workout, Rehabilitation, Restructuring, and M&A of Construction Companies
- Advising on the dispute over the construction agreement for the construction of an apartment complex in Ulsan-si
- Applying for corporate rehabilitation of Sungwon Industrial Development and advising on the rehabilitation process
- Applying for the commencement of corporate rehabilitation process for Lotte Tour and advising on the rehabilitation process
- Advising Kumkang Corporation on acquisition in the M&A procedure involving Bearport Resort (CC)
- Advised various construction companies (receivership companies) during their rehabilitation process: Dongil Construction, TEC Construction, Time Construction, etc.
- Advised the creditors of Time Construction, the receivership company
- Advising on confirmation of the status of the construction company, claim for reimbursement of business costs (loan) (including joint and several guarantee), damages, general meeting for change of the construction company and representing in the ancillary lawsuit for preservation
- Advising on the acquisition of Lake Hills Boeun
- Advising on the acquisition of assets of a sports facility in Ansan-si

Advice on Completion Guarantee, Guarantee of Sale, and Assumption of Obligation
- Advising on matters on moving in after completion of construction of a residential complex in Shin Jungdong Station area
- Advising on the extension of the completion guarantee period of a project for the construction of facilities for an industrial complex
- Advising on the extension of the completion guarantee period of a solar power project
- Advising on the completion guarantee period of a private investment project
- Advising Korea Real Estate Investment & Trust on completion guarantee
- Advising on the settlement of shares with respect to real estate development and sale
- Advising on the completion guarantee and construction costs with respect to a joint venture site
- Advising on the completion guarantee, construction delay and construction payment with respect to a reconstruction project
- Advising an asset management company on acquiring the debts of Jeongseon Land
- Advising on a dispute over indemnification under a joint and several guarantee provided for the housing construction project in Nam-gu, Ulsan-si
- Advising on a dispute with a construction company with respect to the construction of a residential complex in Daemyeong-dong, Daegu-si
- Advising on a dispute over a project on the construction of a golf practice facility in Yangju-si
- Advising the developer of a hotel project on the preliminary injunction concerning enforcement of funds

Advice on Securitization of Unsold Property
- Advising on a dispute over a property sold by private contract under a real estate security trust
- Advising on a dispute over a claim for damages concerning the sale of trust property (apartment complex site) in Ulsan-si
- Advising on the sale of unsold property
- Advising on the supply for unsold land
- Advising on the creation of an unsold property fund

Advice on Trust
- Advising on the dispute over the project financing for the development of an apartment complex in Cheonan-si
- Advising on the dispute over a fraudulent trust concerning the urban development project in Mohyeon (Wangsan) District, Yongin-si
- Advising on the dispute over the trust agreement concerning the construction of an officetel building in Yeonje-gu, Busan-si
- Advising on the claim for payment of delay charges on the PF loan, which have increased due to the delay in the delivery of the building
- Advising on the dispute over the proceeds of a trust concerned with a project on the construction of a residential complex in Youngdeungpo

Advice on Payment by Subrogation
- Advising on the indemnity relationship based on the payment by subrogation of the developer’s PF loan liabilities by the construction
- Advising on the claim for costs in the case of payment by subrogation of claims under a kun-mortgage in an auction procedure
- Advising on the scope of the right to claim for indemnification following payment by subrogation of a guaranteed debt by the joint and several guarantor
- Advising on payment by subrogation strategies for the construction company seeking to acquire the relevant business enforcement right

Advice on the Sale and Purchase of Non-Performing Loans (NPLs)
- Advising on the sale of NPL receivables held by financial institutions, including banks
- Advising a credit card company on the sale of NPL receivables
- Advising on the assignment and assumption of senior loan receivables of a defaulted real estate development business company
- Advising on the acquisition of a priority beneficial interest in a real estate development project and winning the bid in the public auction of a business site

Advice on Real Estate Investment Companies
- Advising on the dispute over the urban development project in Sinheung-dong, Seongnam-si
- Advising on the dispute over the business agreement concerning Metapolis in Hwaseong-si
- Advising on the dispute over the business performance agreement concerning the land development project in Hwaseong-Dongtan District
- Advising on the claim for agreement performance deposit with respect to the complex development project to be carried out in the commercial district of Dongtan New Town
- Advising on the license for the establishment and capital increase of a real estate investment company for the entrusted management of the joint housing development carried out in Yangju Okjeong and project financing for the development project
- Advising on New Stay, a real estate investment company for entrusted management
- Advising on SY-IND, a real estate investment company for corporate restructuring

Advice on Project Financing Vehicles (PFVs)
- Advising on the management rights dispute following the PF loan
- Advising on the commission arising from the loan transaction agreement executed for real estate PF loan
- Advising on a dispute over the obligation to pay settlement money under the PF loan
- Advising on a dispute over the money invested in a development project within the Gwanggyo Land Development Area
- Advising on the shareholder dispute concerning the public housing project in Sangdo-dong
- Advising on the PFV for the development of Yangju Station area
- Advising on the SBC PFV for the Seoripul development project
- Advising on the financing sources for the Seongsu PFV

Advice on Real Estate Funds
- Reviewing the investment structure for creation of a real estate fund and rules on collective investments, including trust agreements
- Reviewing real estate sale and purchase agreements in connection with acquisition and disposition of real estate funds
- Advising on lease agreements, PM agreements and repair costs
- Advising on refinancing, security modification, maturity extension, etc.
- Advising on the assignment (share deals) of beneficiary certificates
- Advising on business agreements and loan agreements concerning loan-type real estate funds
- Advising on the fiduciary duty of collective investment business entities and issues concerning misselling

Project Financing for Urban Renewal Projects and Urban Development Projects
- Advising on the dispute over the penalty charges imposed due to breach of the business agreement before the establishment of a local housing association
- Advising on the dispute over the sale of the land from the Daehyeon District 1 redevelopment project, which was secured by the authorities
- Advising on various disputes involving Gwacheon Jugong Apartment reconstruction project, Banpo Complex 2 reconstruction project, Godeok Jugong First Reconstruction Association, Gaenari Fourth Reconstruction Association, Dunchon Jugong Apartment Reconstruction and Renewal Project Association, Bangbae District 13 Housing Reconstruction and Renewal Project Association, etc.
- Advising on various disputes involving Yangji District 7 Local Housing Association, Yongin Yeoksam District Housing Association, etc.
- Advising on the rescission of contracts and the confirmation of the invalidity of termination, including filing preliminary injunctions for suspension of the meeting of representatives, the resolution of the general meeting, and the performance of duties by the officers of the relevant urban development association
- Representing in administrative lawsuits involving contracts, various licenses and permits
- Representing in lawsuits involving settlement of associations, liquidation and sale of land secured by the authorities
- Representing in lawsuits involving dispositions designating land reserved for replotting and approval of plans to reserve land for replotting

Advice on Overseas Project Financing Projects
- Advising on the management rights dispute over the Huafu Building in
- Advising on the dispute relating to the sale of units in a complex development project carried out in Belize
- Advising on the dispute relating to the complex resort development fund in Las Vegas, U.S.A.
- Advising on a business project financing for the development of a private pool villa and hotel in Bali, Indonesia
- Advising on normalization of a business in Camko City, Cambodia
- Advising on project financing relating to a commercial-residential building development project in Luzhou, Guangxi Zhuang Autonomous Region, China
- Advising on due diligence and project financing relating to a secured loan for a private pool villa in Bali, Indonesia
- Advising on a commercial-residential building development project in Kuala Lumpur, Malaysia
- Advising on the due diligence of development projects in Pampanga Province, Philippines, for construction of a golf course and luxury villas and townhouses, and on equity investments and financial transactions, including project finance loans
- Advising on the golf course and resort development project in Clark Freeport and Special Economic Zone, Pampanga Province, Philippines