Crisis and collapse of Daewoo Company In1998 Daewoo Group landed in a great financial crisis, which was mainly brought by Asian financial crisis due to poor relationship of the financial institution with the Korean government and its poor financial management. According to Ramstad, (2010) when the government of Korean started having deficit, it restricted access to cheap and unlimited credit to the company. This act made many companies in the country to cut down their expansion. Contrary to this, Daewoo increased fourteen new firms in one year. This made the company to incur many expenses. By the end of 1997, the biggest Korea Companies had a dept of about four times their equity. This made companies such as LG and Samsung to cut down their expenditures but in the contrary, Daewoo Company solicited a 40% more debt. In 1999, the company went bankrupt with a dept of about eighty five million dollars. This made the chairman of the company to free the country, as his arrest warrant was issue for claims of embezzlement and misappropriation of the company’s money.