SsangYong Motor Company (SYMC) has applied for bankruptcy to South Korea’s Seoul Bankruptcy Court after the impact of the COVID-19 coronavirus pandemic left the carmaker facing financial difficulties.
The development comes a week after the OEM missed the repayment of 60 billion Korean Won to JP Morgan Chase Bank, South Korea, which was due on December 14.
An official statement published this morning (December 22) said SYMC had decided to apply for rehabilitation procedures including a Company Property Preservative Measure, a General Prohibition Order and Autonomous Restructuring Support - allowing time to agree a company restructure - following a board meeting yesterday.
The decision whether to commence with the rehabilitation procedures is to be agreed with stakeholders, it added.
SsangYong Motors UK continues to operate as normal, however.
Kevin Griffin, managing director for the brand in the UK, said: “Whilst this situation is not ideal, I strongly believe that the Autonomous Restructuring Programme will result in the birth of a stronger company.
“I want to reiterate that our UK operations are totally unaffected, and we are very much open for business.”
SsangYong Motors UK operator Bassadone Automotive had been in negotiations over the acquisition of the Mitsubishi Motor UK operation, but AM understands those talks broke down earlier this month.
Now its key Korean OEM partner is progressing plans to resolve its current liquidity issues early before rehabilitation procedures are commenced.
SYMC said that it will apply for Autonomous Restructuring Support, a private restructuring support programme made with the court which delays the initiation of the rehabilitation procedures by up to three months while the company continues its attempts at private restructuring.
During this period, the company continues its normal business activities.
If the company and its interested parties reach the final agreement for the restructuring, the rehabilitation procedure application will be withdrawn, and SYMC will return to its normal company status “without harm to its reputation”, today’s statement said.
A spokesperson from SYMC parent company Mahindra, said: “During the period of Autonomous Restructuring Support, Mahindra will take responsibility as a major shareholder, and actively cooperate with SsangYong for the normalisation of management through to the early conclusion of negotiations with interested parties.”
An SYMC source added: "We very much regret this situation which is the result of the difficulties being experienced from the worldwide COVID-19 situation, and the concern caused to our partners and stakeholders, especially our employees, sales networks and financial institutions.
“We are making every effort to transform the situation, and to build a more robust and competitive company for the future.”