SSANGYONG MOTOR FILES FOR COURT RECEIVERSHIP

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SsangYong Motor was pushed to the brink of bankruptcy during the 2009 global financial crisis but managed to stay afloat. But it is again seeking court receivership due to a liquidity shortage, after it failed to repay billions of won in loans.

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SsangYong Motor was only recently enjoying a sales boom, as its new sport utility vehicle, released last month, went on to become popular. However, it was not enough for the cash-strapped automaker to overcome years-old losses and financial difficulties. SsangYong again filed for court receivership on Monday afternoon. This is the second time the carmaker applied for the court rehabilitation program. It first sought court receivership in 2009 amid the global financial crisis. SsangYong has been suffering from chronic financial difficulties, posting deficits for 15 straight quarters. Following its default on loan repayment of about 60 billion won borrowed from foreign banks, the troubled automaker failed to payback debts that matured on Monday. The debts amounted to a total of 165 billion won. In addition to the court receivership, SsangYong also applied for an autonomous restructuring support program, which gives the automaker up to threen months to delay the court’s decision and operate normally with the temporary exemption of debt repayment. SsangYong plans to reach an agreement with creditors and complete negotiations with new investors during the period. It will then withdraw the application for court receivership early. But the carmaker’s labor union is strongly opposing the move.

[Soundbite] KIM DEUK-JOONG(CHAIRMAN, SSANGYONG MOTOR LABOR UNION) : "We will hold the Mahindra Group accountable for failing to fulfill its responsibilities as the major shareholder. We will also make it clear that the government is also responsible for this situation, as it has failed to regulate foreign investors and normalize the automobile industry."

The government says it will actively support the struggling carmaker to resolve the managerial difficulties and help its contractors and subcontractors.