SsangYong Motor has confirmed that it has entered into administration in South Korea and will apply for restructuring support, an arrangement under which it will attempt a private restructure while continuing operations for up to three months.
South Korea’s regulatory framework for failed companies mirrors that of the US (‘Chapter 11’) under which companies receive court protection from creditors while all parties attempt to restructure operations.
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SsangYong said it delayed repayment of 60 billion won in loans and interest due to worsening business conditions. The company has been seeking to extend the maturity date with its lenders, but has been unable to reach an agreement, and decided to apply for rehabilitation procedures to avoid interrupting its business operations.
However, the company also said it plans to ‘resolve the current liquidity issue early before the rehabilitation procedures are commenced by applying for Autonomous Restructuring Support’.
Autonomous Restructuring Support is 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. When the company and its interested parties reach the final agreement for the restructuring, the rehabilitation procedure application is withdrawn, and it returns to its normal company status without harm to its reputation.
An official spokesperson from majority shareholder 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.”
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By GlobalDataSYMC has agreed to adjust the concerns of interested parties while the rehabilitation procedures have been suspended. During this time, the repayment burden of the principal loan and interest is lifted, and the company plans to complete the negotiations and apply to the court as soon as possible to withdraw the rehabilitation procedures.
An official source from SYMC, said: “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.”
SsangYong Motors UK continues to operate as normal. 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.”
