As of September 2013, it was the country's 38th-largest conglomerate, but that month it defaulted on its debt due to cash flow issues, and looked to sell off key subsidiaries to raise funds.

[1][2] In January 2014, group chairman Hyun Jae-hyun and three other senior executives were arrested on charges including fraud and malpractice in issuance and sales of financial products.

His commercial success led to his being dubbed the "Sugar King", and he used his own capital to take over a cement factory in Samcheok, Gangwon Province; its owners at the time were eager to sell due to frequent labour disputes and the poor state of the physical plant.

Lee then began repairs to the facilities with the aid of engineers from Germany's Polysius Company, resolved the labour disputes, and revamped the recruiting programmes; he hired heavily from the local Samcheok High School, and many of his new hires' fathers had worked for Onoda in the past.

[8] Hyun Jae-hyun, the husband of Lee Yang-gu's eldest daughter Lee Hae-kyung, abandoned his previous career as a prosecutor to join Tongyang Cement in 1977, and oversaw the Tongyang Group's expansion from cement into a wide variety of other fields, particularly in financial services in the 1980s.

[9] The group faced a cash shortage in September 2013, leading to doubts about its ability to repay debts maturing at the end of the month; NICE Investors Service estimated that it needed to raise ₩800 billion to survive.

[14][15] Tongyang Cement & Energy (동양시멘트; KRX: 038500) went into court receivership on 1 October 2013, and the Korea Exchange suspended trading of its shares.

[16] Observers were surprised, as Tongyang Networks was considered one of the group's best-run companies and a "cash cow".

[20] Hanil Synthetic Fiber (한일합섬), a textiles company, was founded in 1964, but went into court receivership after the 1997 Asian financial crisis.

However, the trial court disagreed with prosecutors that this was a breach of fiduciary duty by Tong Yang Major directors or that this had resulted in economic harm to Hanil.

"[25] In June 2014, POSCO Energy's board of directors voted to acquire all outstanding shares of Tongyang Power in a ₩431.1 billion deal.

[1] Deloitte Anjin supervised Tongyang Securities' sales efforts, but in early January 2014, KB Financial Group withdrew from bidding.

[31] Tongyang Securities also faced accusations of misconduct in selling Tongyang Group company bonds to individual investors, an issue which was drawn to widespread public attention when a female employee committed suicide on 2 October 2013 and left behind a suicide note describing her guilt and regret for her sales recommendations to her customers.

[33] More than 800 affected customers filed a class-action lawsuit against the Tongyang Group and South Korean regulators in January 2014, seeking restitution of their losses.