Cash-strapped South Korean budget carrier Eastar Jet Co Ltd  has requested its advisors come up with alternative solutions other than entering corporate rehabilitation procedure, after the collapse of its takeover deal by Jeju Air Co Ltd.

Eastar Jet has recently hired Samil PwC and Bae, Kim & Lee (BKL) as its sale managers, sources said on August 11. Given Eastar Jet’s financial status, the firms have signed a contingency fee agreement with the budget carrier. BKL provided Eastar Jet with legal advice in the collapsed acquisition deal by Jeju Air.

Samil PwC and BKL have started due diligence on the budget carrier. Based on the corporate rehabilitation procedure, the firms see raising money through a public auction as the only option to rehabilitate the budget carrier.

“BKL and Samil PwC have won a mandate to sell the company based on the procedure for corporate rehabilitation, on a condition that they will receive contingent fees only,” said an industry source. “It is likely to take a while to prepare for the process as they need to set up a team.”

But Eastar Jet reportedly plans to sell the company if an adequate investor appears even before the procedure begins. This is largely because the company will be at risk of going bankrupt if fails to find a buyer once it enters the procedure.

Eastar Jet said it is contacting multiple investors but it reportedly hasn’t entered into any serious negotiations. The potential investors do have interest in the acquisition of the budget carrier but acknowledge the burden of the firm’s current operational and financial status, industry sources said.

Against that backdrop, Eastar Jet has reportedly requested its advisors to come up with measures to receive financial support, such as a pre-packaged plan, a mixture of court receivership and a debt workout plan, or debtor-in-possession financing rather than proceed with an ordinary sale process, which is widely seen as unrealistic.

Advisors of Eastar Jet are likely to be under heavier pressure amid difficulties in seeking potential buyers and the corporate rehabilitation procedure being the only option.

“Eastar Jet have reasonable concerns about risks related to the rehabilitation procedure but the requests made by the air carrier seem a bit immoderate, considering the rehabilitation procedure is the only solution to save the company,” said an industry source. “As it is unlikely to draw up a creative measure, it would be better for the company to go ahead with the procedure as fast as possible.” (Reporting by Ik-hwan Choi)