Ssangyong Motor Facing Extinction Crisis, Any Revival Plans... Court Management Possible from 8th to 10th (Comprehensive)

[Image source=Yonhap News]

[Asia Economy reporters Ki-min Lee and Sun-mi Park] Ssangyong Motor has ultimately been forced into a timing battle after failing to receive a Letter of Intent (LOI) for investment from the U.S. company HAAH Automotive during the voluntary restructuring period. As the court enters the final countdown to corporate rehabilitation proceedings (court receivership), Ssangyong must submit HAAH's LOI containing investment details and a P-Plan (pre-rehabilitation plan) to the court as soon as possible to avoid this.

According to the court and industry sources on the 2nd, the Seoul Rehabilitation Court sent an opinion inquiry form to Ssangyong's creditors the day before regarding whether to initiate court receivership for Ssangyong. According to the Rehabilitation Act and Seoul Rehabilitation Court procedural rules, before starting court receivership, the court reviews Ssangyong's amended documents and consults with the creditors' committee composed of creditors. Previously, Ssangyong submitted amended documents excluding HAAH's LOI on the 31st of last month, when the voluntary restructuring period ended.

This effectively marks the start of the final countdown to court receivership. The court explained, "We gave Ssangyong two chances, but since no meaningful documents were submitted within the deadline, we can no longer delay the process and have reluctantly begun the steps to initiate rehabilitation proceedings as stipulated in the Debtor Rehabilitation Act."

However, the initiation of rehabilitation proceedings is not yet confirmed. The court stated, "If Ssangyong, creditors, and other stakeholders present effective improvement measures, including M&A procedures, we will thoroughly review and consider them." Accordingly, the industry is placing weight on the possibility that court receivership may begin around the 8th to 10th, after the April 7th by-elections.

Therefore, for Ssangyong to escape the court receivership crisis, it is essential to submit HAAH's LOI specifying the investment details and amounts within one week as the related procedures proceed. A court official explained, "An effective (investment) plan that the court can verify and a clear expression of intent are essential," adding, "The investment plan must be certain." Of course, even after the court initiates receivership, submitting an LOI is possible, but it will not convert into a short-term court receivership P-Plan.

The problem is that HAAH is currently experiencing difficulties in negotiations with some investors. It is known that HAAH's strategic investors (SI) and financial investors (FI) find the public claims amounting to 370 billion KRW?comprising 310 billion KRW incurred before Ssangyong's voluntary restructuring and 60 billion KRW for salaries and taxes in January and February this year?burdensome. There are also reports that one FI has withdrawn from investing in Ssangyong, prompting HAAH to seek new investors. Because of this, there are concerns that employees may need to reduce their own salaries until the company returns to profitability to lessen the investment burden on investors.

Currently, companies other than HAAH are also showing interest in acquiring Ssangyong. Edison Motors, a domestic electric commercial vehicle manufacturer, is a representative example, having expressed investment intentions through the media. Additionally, Park Seok-jeon & Company, an affiliate of the small private equity firm Hyunlim Partners, submitted a management rights purchase and investment proposal to the court on the 31st of last month. However, Ssangyong and the Ssangyong Cooperative, a trade creditor group, are looking for companies like HAAH that have a U.S. sales network and can quickly turn the situation around.

Support from the Korea Development Bank (KDB) for Ssangyong is also emerging as a way to overcome the short-term crisis, but KDB maintains its existing stance that support measures can only be considered if Ssangyong secures new investors and submits a business plan capable of restoring normal management after investment. However, financial authorities and KDB appear to have prepared follow-up measures in case Ssangyong ultimately fails to secure investment. Financial Services Commission Chairman Eun Sung-soo told reporters the day before, "Regarding the Ssangyong issue, I have discussed with KDB President Lee Dong-geol how to respond to various scenarios. We will take necessary actions after seeing the results."

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