Embattled Tong Yang Group is suffering through a liquidity crisis as creditors and its sister group refused to help the country’s 38th-largest conglomerate.

Its condition is showing signs of improvement as the group founder‘s wife is determined to save her oldest daughter, who is the vice chairwoman of the group, after her younger daughter rejected the rescue request. But it remains yet to be seen whether the conglomerate will be able to tide over financial squeeze.

The situation involves family relations among Seonam Foundation (owned by Lee Gwan-hee), Tong Yang Group (whose vice chairwoman is Lee’s eldest daughter) and Orion Group (whose vice chairwoman is Lee’s second daughter).

According to the financial investment industry on Tuesday, the Seonam Foundation chairwoman has decided to provide the strained Tong Yang Group with 159,000 Orion Group shares, worth 150 billion won ($136 million), as a type of bailout fund.

Lee’s stock donation came the day after Orion Group clarified that it had no plans to rescue Tong Yang. The chairmen of Tong Yang and Orion are Lee’s two sons-in-law: Hyun Jae-hyun and Tam Chul-kon.

Tam and his wife, in their message to employees, hinted that the rejection was made to protect shareholders and secure Orion’s financial soundness.

Tong Yang and Orion had been sister companies before the latter spun off in 2001. The two once-affiliates were established in 1956 by Lee’s late husband Lee Yang-gu.

Lee reportedly failed to persuade her second daughter and Orion chief Tam into rescuing Tong Yang.

While Orion saw its assets remarkably expand on the back of its exclusive sports-betting business Sportstoto over the past few years, Tong Yang has been suffering cash flow problems due to the sagging performances of some of its units.

Tong Yang Group is saddled with maturing debt, including commercial paper issued by its subsidiaries, totaling 1.1 trillion won.

As some market observers raise the possibility of a default in Tong Yang, financial regulators are rolling up their sleeves to minimize woes by dispatching a group of inspectors to the group’s financial units such as Tong Yang Securities and Tong Yang Life Insurance.

Some analysts predicted that the Financial Supervisory Service may eventually instruct major commercial banks to bail out the cash-strapped conglomerate.

To prevent dishonored bills, the group is reportedly considering auctioning off some of its business units.

By Kim Yon-se (kys@heraldcorp.com)