Seoul, Nov 23: Creditors stepped up pressure today on the patriarch of South Korea's second largest conglomerate LG Group, warning the group's ailing credit card unit could be insolvent this week. The warning came as group chairman Koo Bon-Moo remained reluctant to make a personal debt guarantee in return for emergency loans from creditors to LG Card, bank officials said.
The group promised to rescue the country's largest credit card company through a capital expansion plan, calling for a 1.67 billion dollars bailout.
Koo offered his 5.46 percent stake in the group's holding company LG Corp. as collateral.
Creditors, however, demanded the chairman put up his personal wealth as collateral and his family members were asked to put up their stakes in LG units as further guarantees.
LG Card suspended cash loans to customers for more than three hours on Friday, blaming a computer glitch, although it came close to defaulting on 301.5 billion won of promissory notes.
Kyobo Life Insurance presented the promissory notes to a local bank but took them back following consultations with LG Card, allowing it more time to deal with its maturing debts.
Bureau Report