After 15 straight losing quarters, SsangYong Motor filed for receivership in a Seoul, South Korea, court yesterday.
The Korean offshoot of Mahindra & Mahindra, SsangYong Motor missed 150 billion won (US$135 million) in repayments to the main creditor, the Korea Development Bank (KDB), and other foreign financial institutions.
SsangYong filed for receivership around 3 pm yesterday, the Seoul Bankruptcy Court filing said, following approval at an emergency Ssangyong Motor shareholder meeting after negotiations with the KDB for extra repayment time broke down. The KDB had already stretched the SsangYong Motor repayment schedule by five months to December 21, 2020.
“SsangYong (Motor) decided to file for court receivership based on the belief that the company will be gravely affected if we pay back all outstanding debt,” SsangYong said in a statement. Entering into receivership in South Korea means SsangYong Motor has volunteered to be dramatically restructured, with insiders suggesting it will mean at least 20 percent layoffs in return for financial assistance to pay its salaries and utility bills.
All of SsangYong Motor’s assets have been frozen under the receivership program, which protects it from action over its outstanding debts and receivables.
It will take around three months for the court to finalize the plan and the schedule to restructuring SsangYong, according to the South Korean Trade Ministry.
“After discussions with interested parties and SsangYong’s debt holders, the specifics of the court receivership program will be finalized,” a statement from the ministry said.
Shares in SsangYong Motor collapsed from a peak of 3720 won (US$3.36) to 2770 won ($2.50) on the Korean stock exchange (KRX index) on the news before trading was halted. It had been up 36.45 percent over 2020 trading.
Forbes
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