GS E&C ordered to halt operations for 9 months over site collapse

GS E&C will file lawsuits to nullify up to 10 months of business suspension orders, which were imposed as penalties for the collapse of a parking garage last April at an apartment complex under construction in Incheon, the company said Thursday.

This came as the Seoul Metropolitan Government ordered the construction firm to stop civil engineering works from March 1 to 31 and the Ministry of Land, Infrastructure and Transport ordered the company to halt civil engineering and landscaping works from April to December. The city government is expected to place an additional month-long suspension order, after a public hearing session next month.

“After receiving prior notices on suspension orders last year from the land ministry and Seoul City, we have made every efforts to persuade the authorities. However, they did not accept our claim, so we have no choice but to file lawsuits,” GS E&C said in a statement. “We have already decided to rebuild the apartment complex and started compensating its future residents for the delayed construction.”

The company emphasized that its business will be unaffected by the suspension orders, once the court accepts its injunctions filed to invalidate the orders temporarily.

In that case, GS E&C will be able to continue operations until the final court ruling comes out on its request to nullify the orders. HDC Hyundai Development Company, another construction firm that was ordered in 2022 to halt its operations for 16 months over a construction site collapse in Gwangju, has continued its work over the past two years, as the court accepted its injunctions.

After years of legal disputes, GS E&C is expected to ask the authorities to allow it to pay a fine, so that it can eventually avoid a business suspension.

However, the company may face a setback in winning construction orders for a while, due to its tarnished brand image.

In addition, it suffered a 388.5 billion won ($292 million) operating loss last year, as rebuilding the problematic apartment complex is expected to cost 550 billion won. This was the first time that the builder had faced an annual operating loss since 2013, when it experienced a massive loss from an overseas plant construction project.