If the Taipei District Court grants the two firms’ request, meaning both firms would delay repayment of loans and pay them at a interest lower rate, the banks would seek compensation from the firms’ guarantors, including Gary Wang, chief executive of the Eastern Multimedia Group and son of Rebar founder Wang You-tseng. The senior Wang and his wife have both fled to mainland China.

The 15 banks, which included Bank of Taiwan, First Financial, Chang Hwa Bank, Hua Nan Bank, Chinatrust Financial Holding and Bowa Bank, issued the ultimatum at a meeting yesterday convened by Mega Financial Holding Corp., the largest of the creditors. Together the banks extended 84.6 percent and 86.2 percent of the total outstanding loans to China Rebar and Chia Hsin, respectively.

The banks reached the conclusion that China Rebar and Chia Hsin, which filed insolvency protection last Thursday, had to withdraw their request within a week and propose new operational strategies within two weeks.

If the two firms did not do so by the deadline, the banks would file a lawsuit asking the court to turn down their firms’ requests.

“The purpose for filing insolvency protection is to help the two firms with their restructuring effort, which we support,” said Wen Chi-jung, an assistant manager with Mega. “Yet they cannot restructure at our expense.”

If the court approves the request, the banks would seek compensation from guarantors, including Eastern’s Wang, who has personally pledged NT$2.6 billion as collateral, Wen said

“We have already filed for an injunction against Wang’s asset,” Wen said, adding Rebar has also pledged its land and factories as collateral.

The meeting was also attended by Wang Ling-mei, president of China Rebar, who is implicated in teh scandal .

Wang, who appeared sincere at the meeting, said China Rebar could continue to operate, but it was more difficult for Chia Hsin to do so, according to sources who took part in the meeting.

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