Ssangyong Motor, Additional Shutdown Unavoidable Despite Efforts to Resume Production

[Asia Economy Reporter Ki-min Lee] Ssangyong Motor, which had stopped its factory throughout this month, has launched an all-out effort to resume production, but additional shutdowns are expected to be inevitable.

According to the industry on the 10th, Ssangyong Motor, which halted factory operations from the 8th until this day, is holding daily countermeasure meetings to resume production while contacting parts suppliers to plead for deliveries.

Since the production stoppage, Ssangyong Motor has repeatedly requested suppliers to resume deliveries, but the situation remains difficult, and it is expected to continue the shutdown even after the 16th. About 30 suppliers, including foreign and large corporations, are firmly refusing to deliver. They have not been properly paid for their deliveries, and Ssangyong Motor’s pre-restructuring plan (P-Plan) is also facing difficulties. Concerned about additional losses, they have taken the stance that they can no longer supply Ssangyong Motor. An industry insider said, "Parts suppliers are demanding payment for past unpaid delivery fees due to concerns over Ssangyong Motor’s P-Plan difficulties and the possibility of court receivership, and they have conveyed to Ssangyong Motor that they can no longer supply parts." In response, Ssangyong Motor stated, "We are currently paying parts suppliers in cash, and unpaid amounts can be reduced only when production resumes," adding, "Although it is the Lunar New Year holiday, coordination with partner companies will continue."

Earlier, on the 29th of last month, Ssangyong Motor failed to settle promissory notes worth 200 billion won upon maturity and postponed payment. Subsequently, about 90 parts suppliers refused to deliver to Ssangyong Motor, causing production disruptions on the 1st and 2nd of this month, followed by a shutdown from the 3rd to the 5th due to depleted parts inventory. Even after that, Ssangyong Motor could not receive parts supplies and decided to halt production additionally from the 8th to the 10th, announcing plans to resume production on the 16th after the Lunar New Year holiday.

Internally, Ssangyong Motor is reportedly aiming to submit a rehabilitation plan to the court by the 23rd of this month, but the tug-of-war between potential investor HAAH Automotive and the main creditor bank, the Korea Development Bank (KDB), has made this uncertain. HAAH Automotive, a potential investor in Ssangyong Motor, plans through the P-Plan to reduce Mahindra’s 74.7% stake and participate in a paid-in capital increase worth $250 million (about 280 billion won), becoming the major shareholder (51%). However, the HAAH negotiation team left the country demanding that the main creditor bank KDB provide funds corresponding to the investment amount, while KDB countered that it would decide after reviewing Ssangyong’s future business prospects.

Some speculate that since the price of Ssangyong Motor’s Pyeongtaek factory site has risen, if assets exceed liabilities, Mahindra might exercise influence by lowering the reduction ratio. When submitting the P-Plan to the court, approval from the majority of creditors is required, but to actually obtain court approval, consent from secured creditors such as KDB (three-fourths), unsecured creditors such as trade creditors (two-thirds), and shareholders (half) is necessary. If Ssangyong Motor’s liabilities exceed asset value, shareholder approval is not required; otherwise, shareholders gain voting rights.

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