Seoul Rehabilitation Court Allows Ssangyong Motor Trade Debt Repayment... ARS Program to Be Applied

'Autonomous Restructuring Support' (ARS) program.

[Asia Economy Reporter Choi Seok-jin] On the 21st, the Seoul Bankruptcy Court decided to apply the Autonomous Restructuring Support (ARS) program to Ssangyong Motor, which filed for commencement of rehabilitation proceedings.

The ARS program is a system where the court confirms the creditors' intentions and can postpone the start of rehabilitation proceedings for up to three months. During this period, the debtor can continue normal business operations, including repayment of commercial claims, and autonomously negotiate private restructuring with major creditors.

The Seoul Bankruptcy Court stated, “Ssangyong Motor filed for commencement of rehabilitation proceedings with the Seoul Bankruptcy Court on the 21st, and the First Division of the Seoul Bankruptcy Court (Presiding Judge Seo Kyung-hwan, Chief Presiding Judge) issued preservation orders and comprehensive injunctions at 5 p.m. on the same day.”

It added, “Ssangyong Motor requested the application of the Autonomous Restructuring Support (ARS) program between the debtor and creditors. While issuing preservation orders prohibiting repayment or provision of collateral for monetary debts incurred before 5 p.m. on the same day, the court made an exception for repayment of commercial claims related to continuous and normal business activities, allowing Ssangyong Motor’s commercial creditors to receive repayments normally, thereby minimizing anxiety among Ssangyong Motor’s partner companies and ensuring stable business operations.”

The Seoul Bankruptcy Court explained that it established the ARS program in July 2018 to support successful corporate rehabilitation and first applied the program to Dynamic Co., Ltd. in August 2018, and has been continuously implementing the ARS program since then.

According to the Seoul Bankruptcy Court, “Under the ARS program, the debtor can continue normal business operations, including repayment of commercial claims, and autonomously negotiate private restructuring with major creditors, preventing the stigma effect caused by the commencement of rehabilitation proceedings. If the restructuring plan is finally agreed upon, the rehabilitation application can be withdrawn, returning the situation to one without a rehabilitation application. If negotiations fail, rapid rehabilitation proceedings can proceed through methods such as preparing a pre-plan.”

Ssangyong Motor is reported to have assets of 1.6906 trillion KRW and liabilities of 1.5893 trillion KRW as of September 30 this year, with sales reaching 2.05 trillion KRW as of September this year. As of the 17th, the company employs a total of 4,845 employees.

Ssangyong Motor cited the following reasons for filing for rehabilitation proceedings: ▲ deterioration of domestic sales performance due to intensified competition in the SUV market ▲ decline in export performance due to the effective suspension of exports since 2015 ▲ shortage of new car sales and increased marketing costs ▲ overall slump in the automobile market due to the spread of COVID-19.

Additionally, Ssangyong Motor presented the following as grounds for rehabilitation prospects: ▲ steady domestic market performance, ranking third with total sales of 107,789 vehicles in 2019 ▲ efforts to expand export markets through global marketing ▲ securing experienced professional personnel.

Furthermore, the company appealed to the court that rehabilitation is necessary to ensure the livelihood of approximately 600,000 workers and their families employed by Ssangyong Motor-related companies, to prevent economic downturn in Pyeongtaek City, and to avoid the loss of accumulated experience and technology in the automobile industry as a foundational industry.

This content was produced with the assistance of AI translation services.