A total of 55 small and mid-size companies in South Korea, mostly manufacturers and property developers, were found to have bad financial health that may put them under a debt workout program or a court receivership, industry data showed Wednesday.

Local banks completed an assessment of 899 companies with loans of below 50 billion won ($41.9 million) last month and classified them in four categories of A, B, C, D based on their financial soundness.

C-rated companies can apply for a debt workout program, while D-rated firms are liquidated or placed under a court receivership.

The recent assessment showed that 30 firms were C-rated, while 25 firms were D-rated, according to the data.

The assessment results show that the number of financially troubled small and mid-sized firms declined. The number of C and D-rated firms reached 256 in 2009 but fell sharply to 78 last year on the back of the robust economic recovery.

Market watchers, however, warned the figure may rebound next year, given the ongoing external uncertainties and financial turmoil.

A total of 128 companies, mostly smaller firms, listed on the Seoul main bourse saw their liquid assets more than halve in the first six months of this year, according to earlier data compiled by the Financial Supervisory Service and the Korea Listed Companies Association.

Another set of data by the FSS shows that the loan delinquency ratio for the smaller firms stood at 1.85 percent as of end-August, more than three times larger than 0.59 percent of bigger firms. 

(Yonhap News)