Korea's Tongyeong local authority is to develop the bankrupt ShinaSB yard site into a cultural and tourist park.
A complex of facilities will be built on the land, the Yonhap news agency reported.
ShinaSB has been under court receivership since 2014 after running up debts of $1.6bn.
Main creditor Korea Development Bank (KDB) is trying to sell its cranes and other equipment.
