It becomes a too-big-to-fail system, with the government stepping in as needed (implicit subsidy).

Korea is an economic experiment of monstrous proportions in many ways. There are a lot of risks that are specific to their system buy it feel like even if the whole thing massively blew up at this point that the average Korean would be better off than if they had never taken the risks.

How even would the government step in with it being landlord to landlord like that though? It's not centralized in any way.

Buying the assets for enough to cover the landlord's debts. then liquidate the assets for market value. The government could even just hold the assets themselves.

This is the natural outcome of building an economy based on usury/interest, which is exactly what this transaction is.