Cash-strapped Hyundai Engineering and Construction Co., the nation’s largest builder, is under pressure from creditors to come up with a viable rescue plan or face liquidation.

"The fate of Hyundai Engineering will likely be decided within one week,’" Finance and Economy Minister Jin Nyum told reporters.

Hyundai Engineering, a key affiliate of the giant Hyundai group, was told last week by government-controlled creditor banks that it deserves no new bank loans, meaning that it will face liquidation if it cannot survive with its own financial resources or help from other Hyundai subsidiaries.

It has been bailed out by creditor banks four times this year, but missed a payment of $200 million in commercial notes last week. The builder made full payment of the commercial notes a day later but its future was in question.

It reportedly needs $80 million in cash to pay debts this week, and has $1.4 billion coming due in commercial notes by year’s end.

To avoid the huge impact the builder’s collapse may have on South Korea’s economy, creditors over the weekend asked Hyundai Engineering’s owner, Chung Mong-hun, to agree to capital reduction and a debt-for-equity swap.

The proposed deal by creditor banks, if accepted, would deprive Chung of management control of the construction firm.

The owner rejected the swap and instead offered to sell some of his stock in other Hyundai affiliates to save the construction firm. It was unclear whether Chung’s offer was enough to satisfy creditor banks.

Late Monday, Hyundai group said it is also considering selling shares in its units held by affiliate Hyundai Merchant Marine Co. to ease the liquidity crisis at the builder.

The group said in a statement that it was seeking to sell a 12.46% stake in Hyundai Heavy Industries Co. and a 9.25% stake in Hyundai Electronics Industries Co. The shares are valued at about$505 million.

"Hyundai Engineering basically cannot survive on its own. It cannot even pay the interest on its debts," said Lee Keun-mo, the head researcher at Good Morning Securities.

The massive corporate restructuring under way is part of reforms being pushed by the government to restore sagging investor confidence in its economy. Investors have strong doubts about many financially unstable firms listed on the stock exchange.

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