Ssangyong Motor Enters 'Final Card' P-Plan... Aiming to Complete by April

Partners Agree to Postpone Payment of Promissory Notes Worth 180 to 200 Billion Won

[Image source=Yonhap News]

[Asia Economy Reporter Ki-min Lee] Ssangyong Motor, whose sale negotiations have collapsed, is finally entering a pre-packaged plan (P-plan).

According to industry sources on the 29th, Ye Byeong-tae, president of Ssangyong Motor, and other executives held an emergency meeting the previous afternoon with the Ssangyong Motor Cooperative Emergency Committee, composed of Ssangyong Motor’s partner companies.

At this meeting, President Ye informed the emergency committee of the collapse of the sale negotiations and sought their consent for the P-plan. He also requested a payment deferral for promissory notes worth 180 to 200 billion won, maturing on the 29th. Ssangyong Motor’s parts suppliers reportedly agreed to the P-plan and the payment deferral to prevent Ssangyong Motor’s bankruptcy. President Ye stated, "Regrettably, the negotiations broke down because Mahindra insisted on their position, leading us to proceed with the P-plan," and added, "We intend to move forward with the new investor HAAH Automotive and the P-plan, and we are currently negotiating the contract terms."

The P-plan is a restructuring method in which the court quickly reduces debt, and creditors inject new funds. If creditors holding more than half of the debtor’s debt or the debtor with creditors’ consent submit a pre-packaged rehabilitation plan before the commencement of rehabilitation proceedings, the court reviews and approves it. Therefore, it proceeds faster than the general rehabilitation process, which usually takes more than four months to submit a rehabilitation plan. Ssangyong Motor reportedly aims to complete the P-plan by the end of April this year.

To enter the P-plan, consent from the trade creditors, i.e., partner companies, is essential. The Ssangyong Motor Cooperative, consisting of about 350 small and medium-sized parts suppliers, estimates that unpaid delivery payments since last October exceed 500 billion won. Ssangyong Motor’s liquidity crisis is spreading to its partners, raising concerns about a domino effect of bankruptcies.

Currently, Ssangyong Motor cannot repay the promissory notes maturing on the 29th due to its financial situation, so it plans to first declare a default and pay half of the delivery payments for December and January in cash. The partner companies have agreed to cooperate, as Ssangyong Motor has announced its intention to continue the contract with HAAH. From February, Ssangyong Motor plans to pay part of the material costs weekly in cash from car sales proceeds.

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