June 23 review comes as creditor exposure exceeds W1.3 trillion JTBC headquarters in Mapo-gu, western Seoul (JTBC) JoongAng Group's debt crisis will face its first major court test next week, with the Seoul Bankruptcy Court set to question representatives of five key affiliates that sought rehabilitation after broadcaster JTBC defaulted on short-term debt.The court will question representatives of JTBC, JoongAng Holdings, Contentree JoongAng, Megabox JoongAng and JoongAng P&I on June 23, according to legal circles Wednesday. It is expected to examine the scale of their liabilities, liquidity conditions and possible debt restructuring plans before deciding whether to open rehabilitation proceedings.JTBC has also asked the court to apply an autonomous restructuring support program, or ARS, under which the court can hold off opening formal rehabilitation proceedings while the company negotiates with creditors. If approved, the opening decision for JTBC could be deferred for up to three months, while the other affiliates remain under the regular rehabilitation process.The crisis erupted after JTBC failed to repay 20.6 billion won ($13.6 million) in securitized short-term borrowing that matured last week, triggering a default that quickly spread into a groupwide liquidity emergency. Within days, the group's core affiliates sought court protection, while the court issued a comprehensive injunction freezing assets and claims to prevent creditors from moving first to seize collateral or recover debt.The fallout is now rippling through Korea's credit market. Financial firms' direct credit exposure to five JoongAng affiliates that filed for rehabilitation is estimated at 796.9 billion won, while exposure to eight major JoongAng-related companies, including JoongAng Ilbo, SLL JoongAng and JoongAng Ilbo M&P, stands at about 1.32 trillion won, according to NICE Investors Service.Banks account for most of the exposure at 832.9 billion won, followed by special financial institutions with 164.2 billion won, securities firms with 125.1 billion won and credit finance companies with 79.7 billion won.NICE said the figures exclude indirect exposure through private equity funds, securitization vehicles and other structures. It put total borrowings at JoongAng's eight major affiliates at about 2.8 trillion won, suggesting broader market exposure could be larger.Retail investors may face sharper risks. Market watchers estimate about 790.5 billion won in JoongAng-related public bonds and commercial paper may have been sold through brokerage channels, pointing to sizable exposure among retail and other noninstitutional investors. Total corporate bonds outstanding across the group are estimated at about 900 billion won. Hong Jeong-do, vice chairman of JoongAng Group, bows in apology during a press conference at the company's headquarters in Seoul after several affiliates, including JTBC, moved to seek court-led rehabilitation amid a groupwide liquidity crisis. (Yonhap) The sharp deterioration has already been reflected in credit ratings. NICE Investors Service cut JTBC's senior unsecured bond rating to D from CCC, after earlier lowering its long-term rating to CCC from BBB, while downgrading JoongAng Ilbo to BB- from BBB. Korea Ratings also downgraded JTBC's commercial paper and unsecured bond ratings to D and cut JoongAng Ilbo's long- and short-term ratings to B- and C, respectively.For financial firms, the key question is potential losses. NICE singled out Hanyang Securities as the only firm with material exposure relative to its assets and capital, with book exposure of about 84 billion won, including 54 billion won to JTBC and 30 billion won to JoongAng Ilbo.For bondholders, the court process could mean delayed payments, maturity extensions, reduced interest or losses on principal, depending on the rehabilitation plan.Meanwhile, the fallout also hit equities, with Hanyang Securities shares tumbling more than 11 percent Wednesday, while trading in Contentree JoongAng has been suspended since Monday following its rehabilitation filing.Experts say the crisis goes beyond a simple funding squeeze."This is not a simple case of cutting off a troubled subsidiary," said Lee Min-kyu, a bankruptcy lawyer at Hansu Law Firm. "It signals that funding channels across the group have been blocked to a degree that even the holding company can no longer withstand."Korea Ratings offered a similar view in a report Tuesday, saying the simultaneous rehabilitation filings show that the group's financial burden has "exceeded a manageable level" and that its funding conditions and liquidity response capacity have "sharply weakened."The ratings agency said the effectiveness of the group's self-help plans, including asset sales and affiliate stake securitizations aimed at reducing debt and securing liquidity, has also been impaired. "It will be difficult to ease short-term liquidity risks and improve the financial structure through self-help measures alone," it said.