Kang’s Distribution Inc. (KDI), the largest Korean-owned international phone card company, is going bankrupt, sending a scare to its business partners in the Korean-American community.
The Korean American Grocers Association of California (KAGRO) has told the Korean Daily that many businesses have already made an inquiry to stay up to date on the latest situation regarding KDI.
“More than 90 percent of our members are currently selling KDI phone cards,” said KAGRO chairman Jung-chil Kim. “Many of them are anxious over the sudden news.”
The number of Korean businesses affected by KDI’s bankruptcy is as many as 2,000, the Korea Daily can reveal. The loss suffered by the businesses also vary from as little as $100 to as much as $2,000. Other liquor stores as well as 99 Cents Only Stores are also affected.
To minimize the losses suffered by the businesses, the KAGRO has formed a taskforce team to take complaints from the businesses that have been affected by KDI’s bankruptcy.
“Leaving a case like this alone could lead to more of the similar cases in the future,” Kim said. “To prevent that from happening, we’ll have to hire a lawyer to react to this.”
The KAGRO will launch an investigation to discover if KDI purposely filed for bankruptcy to minimize its losses. It is also considering a collective lawsuit against KDI.
“To file a collective lawsuit, we’ll need at least 50 businesses to agree that they’re ready to take legal actions,” said Kim. “We encourage all businesses affected by this one way or the other to contact us.”
Even though the KAGRO has amped up its efforts, some of its members still remain indifferent.
“KDI has been preparing to file for bankruptcy for a while from what I’ve known,” said a liquor store owner, only identified by the last name Jang. “I have no idea what the KAGRO has been doing to prevent this situation. Can we even get our money back by filing a lawsuit?”
The KAGRO plans to hold a press conference in the near future to announce its plans.
Founded in 1996, KDI generated a revenue of over $100 million last year. However, as phone cards began to become an outdated sales item, it filed for Chapter 7 bankruptcy on June 9.
Chapter 7 bankruptcy entails a process for businesses with no possibility of recovering. KDI will open discussions with its creditors on July 18 at the Santa Ana Federal Credit Union.
By Sangho Hwang