Eunma Apartment in Daechi-dong, Gangnam, Seoul.
Located in one of the wealthiest areas in Gangnam, the third floor of this apartment shopping complex housed the headquarters of Hanbo Group.
People were often shocked to learn that the headquarters of a major conglomerate—recently bumped up four spots in the corporate rankings to 14th place—was not in a gleaming high-rise but rather occupying a single floor of an apartment complex.
In fact, this was the part that confused new hires the most when they first reported for work at Hanbo Group.
It was Hanbo that had built the Eunma and Mido Apartments, yet the company had never constructed its own corporate building. This was due to the personal philosophy of Chairman Choi Byung-moo, who believed that "a carpenter goes bankrupt the moment he builds his own house."
The irony? The very third floor being used as the company's headquarters wasn't even owned by the group—but by Chairman Choi himself.
(Of course, not long from now, when the Hanbo Group scandal breaks, the entire third floor used as the HQ will be put up for auction—but that's a story for later.)
***
Inside the spacious chairman's office, located at the far end of the third floor.
Chairman Choi Byung-moo sat at the center, surrounded by six top executives, each with a grim expression.
With a cigarette between his lips, Choi finally broke the heavy silence in a low voice.
"So what you're telling me is… we've run out of cash?"
Seo Joon-je, the executive in charge of finance and a former deputy governor of Ilhan Bank, replied with a hardened look.
"Yes, sir. After we pay out salaries to employees today, there will be less than 10 billion won in cash remaining."
While that may sound like a lot, it was pitifully inadequate for a conglomerate ranked 14th in the nation.
Sure enough, the moment they heard the figure, the gathered executives couldn't help but let out low groans of disbelief.
"And once we cover the bills due over the next three days, that remaining amount will be entirely drained."
"We issued more corporate bonds last month and even sold off some real estate. And you're saying we still don't have money?"
Choi's tone turned sharp with frustration, and Seo replied with visible exhaustion.
"As you said, we raised roughly 300 billion won through bond issuance and asset sales. But the money was immediately eaten up by interest payments and construction costs for the Dangjin steel plant."
"Mm…"
"We've got a string of promissory notes maturing through the end of the year. At this rate, we may not make it past next week before defaulting."
At the word default, everyone's eyes widened or faces paled as they swallowed hard.
But in truth, this outcome wasn't entirely unexpected.
Externally, they had done their best to keep things quiet, but internally, the group's financial health had been deteriorating rapidly for over a year.
The construction industry was in a slump, and the acquisition of Yuwon Construction—which had defaulted the previous year—had only made matters worse. But the biggest blow was the spiraling costs of the steel plant in Dangjin.
Initially estimated at 2.7 trillion won, the construction cost had ballooned to 5.7 trillion. At that rate, a cash crunch was inevitable.
As the air in the room grew heavier, Seo cautiously glanced at Choi and suggested carefully,
"For now, would it be possible to pause or slow down the Dangjin steel project until our financial situation improves?"
"No. That's not an option. We're just a few months away from completion—we can't stop now."
Choi's reply came fast and firm.
"But even covering the bills coming due right now is a stretch. We have no way of raising the 700 billion won still needed to finish the project."
At this, Executive Director Woo Young-hak—one of Choi's oldest allies since the company's founding—interjected.
"If we halt or slow down construction now, it'll just end up costing us more in the long run."
"If we can't cover the bills due by year-end, we're going under. Dangjin isn't the problem right now—default is."
Seo Joon-je raised his voice, frustration evident on his face.
"Is there no way we can secure an additional loan from the bank?"
Chairman Choi Byung-moo, holding a cigarette between his fingers, asked calmly.
"And how much are we already in debt to the banks?"
Seo shook his head with a troubled look.
"Just the debt related to the steel division alone amounts to 3.6 trillion won—primarily with our main bank, Ilhan. And if you include all our affiliates, the total jumps to over 8 trillion."
Everyone fell silent at the astronomical figure.
Seo continued, his voice firm despite the heavy atmosphere.
"We're paying nearly 1 trillion won in annual interest. Even if we somehow complete the Dangjin steel plant, it will be nearly impossible to run the company normally under this burden."
Chairman Choi stubbed out his nearly finished cigarette in a crystal ashtray and responded decisively.
"Still, halting construction is not an option."
"But we're completely out of cash…"
As Seo tried again to reason with him, Choi cut him off mid-sentence with a dry, blunt tone.
"If we stop construction, it will be an admission to the world that our group is in a severe financial crisis."
Seo almost blurted out, But isn't that the truth?—yet he bit his tongue and held back.
The truth about Hanbo Group's financial woes was already an open secret—well known not just in the Myeongdong loan markets but also among investors on Yeouido.
One of the clear signs was that Hanbo Group's corporate bonds were being traded in Myeongdong at prices far below face value.
"Even just rumors of financial trouble are enough to tank our stock and freeze up our funding. But if we actually stop construction at the Dangjin steel plant, what do you think will happen?"
When Seo didn't answer immediately, Choi smirked and lifted the corner of his mouth with cold sarcasm.
"The banks, terrified they won't get their money back, will pounce—scrambling to call in their loans. Seo, you're an ex-banker. You know this better than anyone."
Seo stayed silent. It was the truth—he couldn't argue.
"And that's not all. The subcontractors, scared we're heading for default, will storm our offices demanding overdue payments. Or they'll dump our promissory notes for pennies, causing a wave of panic."
"…"
At the time, it was common practice for contractors to receive not cash but promissory notes—a kind of deferred payment guarantee—from the main company.
From the perspective of the primary contractor, this was beneficial since it allowed them to hold onto their cash and keep their funds circulating. But for the subcontractors, it was nothing short of a burden.
Sure, if they held the notes until maturity, they'd receive the full promised amount. But most subcontractors, strapped for immediate cash, were forced to sell the notes at a discount in the Myeongdong private loan market—gritting their teeth and taking the hit.
You might think they could just refuse to accept the notes, but doing so would mean having their contracts cut off entirely. They had no real choice.
The bigger issue now was that rumors of Hanbo Group's financial troubles had made their way through the Myeongdong market, and note brokers were becoming reluctant to touch Hanbo's paper at all.
As a result, the subcontractors who received Hanbo's promissory notes were either forced to sell them at nearly half their value or hold onto them unwillingly until they matured.
And because selling at such a steep discount meant enormous losses, most ended up reluctantly holding the notes to maturity.
Making matters worse, Hanbo Group had started issuing notes with longer maturities—nine months to a year—instead of the standard three to six months, all in an effort to ease their own liquidity crunch.
This was the very reason why, when Hanbo Group eventually defaulted, so many small and midsized subcontractors went bankrupt in its wake.
Chairman Choi's eyes were sharp with resolve. He had no intention of backing down.
"If we back off now, we'll be inviting the default that might otherwise be avoidable."
"But as I mentioned earlier," Seo Jun-je said hesitantly, "without an injection of new capital, there's no money left to continue the construction."
As Seo spoke with visible reluctance, Chairman Choi straightened up in his chair.
"What if we use our remaining shares as collateral for a loan?"
"Of the 9 million shares of Hanbo Steel held by you and your family," Seo responded without hesitation, "5.4 million are already pledged to the bank. That leaves 3.6 million. And with the recent stock price plunge, even if we used those as collateral, we'd only get about 21 billion won at best."
Seo had clearly already done the math.
"That might keep us going for another month or two, but it's not a real solution."
He shook his head, skeptical.
Chairman Choi crossed his arms, thinking silently for a moment. Then he turned to his most trusted aide, Executive Director Woo Young-hak.
"Mr. Woo."
"Yes, sir."
"We've still got a few commercial units under borrowed names over in the Mido Apartment across the street, don't we?"
Woo glanced around at the other executives before answering cautiously.
"There are four 13-pyeong units and one 15-pyeong unit."
"What's the current going rate on those?"
"A 13-pyeong unit goes for about 80 million won, and the 15-pyeong one is just under 100 million," Woo replied.
"That'll do," Chairman Choi muttered with a small nod.
He turned again to his left, addressing Director Seo Jun-je.
"Contact President Ryu at Ilhan Bank. Tell him I'd like to meet with him urgently this evening."
"I've already reached out multiple times requesting additional support," Seo replied, his voice tight. "They've rejected us, saying further loans are not possible."
"That's exactly why I'm stepping in personally."
"How do you plan to convince him?" Seo asked, unable to hide his concern.
Choi let out a dry chuckle through his nose.
"You know what everyone loves, regardless of gender? Money. If the conversation didn't go well, it's only because we didn't bring enough of it to the table."
The bold declaration of intent to offer a bribe was classic Choi Byung-moo—the man known as the "King of Lobbying."
He had weathered countless crises with bribes and backroom deals, so neither Seo nor the other executives were particularly shocked. If anything, they almost looked relieved—expecting that Choi would once again find a way to wrangle the cash they needed through his signature tactics.
"If I remember right," Choi said, leaning back comfortably in his chair, "this is President Ryu's final term, isn't it?"
"As far as I know, yes. It's customary for bank presidents to retire after their second term," Seo answered.
Choi smiled, satisfied.
"Perfect timing. He should be thinking about his retirement by now."
He gave his orders with the smug confidence of someone who already believed the problem was solved.
"One bank alone might not be enough to get us the full amount. Schedule meetings with the presidents of the other three banks heavily exposed to our steel division. Do it as soon as possible."
"Yes, sir."
As Seo responded, Choi pulled out a fresh cigarette and placed it between his lips.
"I survived the Suseo case," he muttered, lighting the cigarette. "I'm not about to be tripped up by something this small. Just like always—once the Dangjin steel mill is completed, everything will fall into place. Of course it will."
He muttered it like a mantra, trying to convince himself.
The creeping anxiety in his chest, he did his best to ignore.