Ssangyong Motor "Will Steadily Implement P Plan to Establish Foundation for Business Normalization"

[Image source=Yonhap News]

[Asia Economy Reporter Ki-min Lee] Ssangyong Motor announced on the 4th that it will steadily proceed with the pre-rehabilitation plan (P-Plan) to establish a foundation for early business normalization.

This is the first time Ssangyong Motor has officially announced its position on the promotion of the P-Plan. The Korea Development Bank recently revealed that HAAH Automotive, a potential investor, left the country without making a final decision on the P-Plan. Following the spread of negative sentiment regarding Ssangyong Motor's rehabilitation process, the company appears to have taken direct action to address the situation.

Ssangyong Motor stated, "We are currently in discussions with the Mahindra Group and potential investors regarding the procedures related to the P-Plan to ensure smooth progress. Once these discussions are finalized, we plan to prepare the pre-rehabilitation plan and proceed with the creditor consent process."

On December 21 of last year, Ssangyong Motor filed a petition to commence rehabilitation proceedings along with a request to defer the decision on whether to commence rehabilitation proceedings (ARS program) at the Seoul Bankruptcy Court. The decision on whether to commence rehabilitation proceedings has been deferred until the 28th of this month.

Ssangyong Motor explained that it initially planned to conclude negotiations early with the Mahindra Group and new investors during the deferral period, reach an agreement on stakeholder adjustments including creditors, and withdraw the petition for rehabilitation proceedings. However, due to delays in negotiations with new investors, it was compelled to consider proceeding with the P-Plan.

The P-Plan utilizes the pre-plan submission system stipulated in Article 223 of the Debtor Rehabilitation and Bankruptcy Act. When there is a possibility of new investment or debt repayment, it allows the debtor to prepare a pre-rehabilitation plan and submit it to the court before the commencement of rehabilitation proceedings with the consent of the majority of creditors. This enables the rehabilitation process to proceed swiftly, saving costs and time, and promoting rapid corporate normalization.

Ssangyong Motor announced plans to promptly conclude negotiations related to payment for supplies with partner companies and increase sales volume through the launch of improved product models and aggressive marketing strategies.

However, facing a liquidity crisis, Ssangyong Motor deferred payment on promissory notes worth 200 billion KRW that matured last month, leading some parts suppliers to halt deliveries, resulting in a factory shutdown since the day before yesterday.

The Ssangyong Motor Partner Emergency Response Committee, consisting of about 300 small and medium-sized partner companies, issued an appeal urging the government to provide substantial support so that all partners can continue supplying parts with hope for Ssangyong Motor's normalization.

Ssangyong Motor expressed, "We deeply regret causing concern to our partners and financial institutions due to Ssangyong Motor's issues amid the difficult situation caused by the COVID-19 pandemic. Based on the cooperative labor-management relationship we have maintained, we will do our best to consult with stakeholders to overcome the current crisis as soon as possible."

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