SsangYong Motor Company filed for receivership on Monday,… as it grappled with paying outstanding debts.
This is the company’s second time placing itself in this position, after going through the same process 11 years ago.
The latest filing comes as the South Korean affiliate of Mahindra and Mahindra,… an Indian carmaker, failed to pay a total debt of 150 billion won, equal to some 135 million US dollars.
According to a company statement, the decision to file receivership was inevitable,… with current debts deemed to be having “grave” impact on its businesses during the pandemic.
The motor company currently owes 54 million dollars to its foreign financial creditors and another 81 million dollars to the Korea Development Bank, its main creditor.
The move, for the most part, was as a result of Mahindra’s decision to inject a one-time payment of 36 million dollars over the next 3 months, instead of its original plans to pump over 200 million dollars into the company over the next three years.
This comes after its board voted against that investment due to the COVID-19 pandemic.
Prior to entering receivership, the company will follow an autonomous restructuring support program for the next 3 months.
Under the ARS, SsangYong will be able to continue operations until court-led restructuring begins.
During this period, the company is also set to look for a new investor, as Mahindra is willing to give up its title as the largest shareholder.
On top of the massive debt-burden, sales over the past 11 months for its South Korean units dropped 19 percent on year.
From January to November, some 96-thousand vehicles were sold,… fewer than the 119-thousand sold last year.
Choi Min-jung, Arirang News.