Q10 balance is at its lowest, what happens to the 1 trillion won settlement owed to Timeef?

Damage amount estimated by the Financial Supervisory Service is "170 billion won" vs. sellers claim "1 trillion won"
Concerns about prolonged settlement delays due to Q10 Group’s liquidity ‘bottom’

There are claims that as the delayed settlement of Timon and WeMakePrice (TimePrice) has not been resolved, a series of stores that have not received settlement are on the verge of bankruptcy. The Financial Supervisory Service put the unsettled amount at 170 billion won, but sellers say it is 1 trillion won. The industry is paying close attention to whether Q10, whose liquidity has fallen to the bottom, will be able to overcome the impasse.

At a briefing on the 25th, the Financial Supervisory Service estimated the unsettled amount of Timon and WeMakePrice at 170 billion won. Sellers at Timef stores claim that the monthly settlement amount of both companies is around 500 billion won, which is much larger than what the Financial Supervisory Service announced. They said, “Timef has a system of settling after two months, and the settlement amount reaches 1 trillion in two months.” At the same time, he expressed doubts about Q10's ability to pay due to lack of liquidity.

Last year, WeMakePrice sales amounted to KRW 126.8 billion, showing a downward trend for three consecutive years. Timon did not submit its 2023 performance by the deadline. Sales in 2022 will amount to 120.497 billion won, and operating loss will amount to 152.7 billion won.

The industry estimates that Timef's average monthly transaction size is around 1 trillion won. It is known that suspicions about the delay in TimePf settlement have been raised among sellers two months ago. Timon is a system where settlement is made on the +40th day of the last day of each month, and WeMakePrice is a system where settlement is made on the +7th day of the following month from the monthly sales deadline. Normally, for Timon, it takes two months, and for WeMakePrice, it takes three months for cash to arrive in the account.

Delays in settlement were made public for sales made before May. Now that the settlement for June and July is uncertain, if sellers' claims are true, the damage amount could increase further.

60,000 sellers in store… Damage ranges from tens of millions of won to billions of won.

If store companies continue to go bankrupt, the damage to the financial sector, including banks, will be severe due to a chain reaction. According to the industry, the number of sellers in Timef stores is known to be as high as 60,000. Many of these are small or medium-sized businesses or small business owners. If settlement is not made on time on the platform, company operations will be disrupted.

Sellers who visited Timon's headquarters in Gangnam-gu that day responded, "Seller damages amount to tens of millions of won or as many as billions of won," and "I am at a loss as to how to pay my employees' salaries right now." "If Timon and WeMakePrice do not settle the sales payments, our company may go bankrupt."

Mr. A, who identified himself as a Timef seller in a large community, said, “Most sellers were aware of the settlement delay, but they were concerned that the reputation of the platform would worsen and the number of consumers would decrease, so they tried to postpone making it public.”

The industry reacted by saying that it was unreasonable to proceed with unreasonable M&As one after another in a situation where losses amounted to hundreds of billions of won were continuing, and that "eventually, something was going to explode." In the meantime, Q10 did not apply escrow (secure purchase transaction system) and directly managed the amount paid by consumers. Some speculate that Q10 Group may have used the settlement amount to be paid to sellers to promote M&A.

Bang In-tae, senior attorney at Daeryun Law Firm's Corporate Advisory Center, said, "If a consumer pays for a purchase but does not receive the product, and the platform company uses this amount for business expenses other than payment to the seller, it is considered embezzlement. In this case, it will be a criminal case, and the CEOs of WeMakePrice and Timon can be punished."

[View full article] - Q10 balance is at its lowest, what should happen to the 1 trillion won settlement amount owed to Timeef? (Shortcut)