Court Initiates Steps for Ssangyong Motor Rehabilitation Procedure... Seeks Creditors' Opinions on Commencement of Court Receivership

[Image source=Yonhap News]

[Asia Economy Reporter Choi Seok-jin] The court has begun the process of initiating corporate rehabilitation proceedings (court receivership) for Ssangyong Motor, whose potential investor's investment decision has been delayed.

On the 2nd, the Seoul Rehabilitation Court announced that it had conducted a procedure the previous day to seek opinions from the Seoul Rehabilitation Court Management Committee and Ssangyong Motor's creditors' council (representative creditor Korea Development Bank) regarding whether to commence rehabilitation proceedings.

The Seoul Rehabilitation Court stated, "Although we gave Ssangyong Motor opportunities twice, no meaningful materials were submitted within the deadline, so we can no longer delay the process and have reluctantly entered the steps to initiate rehabilitation proceedings as stipulated by the Debtor Rehabilitation and Bankruptcy Act."

However, the Seoul Rehabilitation Court left room for consideration, saying, "If Ssangyong Motor, creditors, and other stakeholders present effective improvement plans, including the merger and acquisition (M&A) process, we will thoroughly review and judge them."

The Seoul Rehabilitation Court explained the background for entering the steps to initiate rehabilitation proceedings, stating, "The suspension period under the Autonomous Restructuring Support (ARS) program between the debtor and creditors has expired, and the Letter of Intent (LOI) required by the correction order was not supplemented by the correction deadline set in the correction order."

The court's move to confirm stakeholders' opinions the previous day was a measure taken in accordance with Article 49, Paragraph 1, and Article 50, Paragraph 1 of the Debtor Rehabilitation and Bankruptcy Act, which stipulate that a decision on whether to commence rehabilitation proceedings must be made within one month in principle. Ssangyong Motor applied for the commencement of rehabilitation proceedings at the Seoul Rehabilitation Court on December 21 of last year.

On the same day, the court issued preservation orders and comprehensive injunctions against Ssangyong Motor, and following Ssangyong Motor's application to proceed with the ARS program, it decided on December 24 of the same year to suspend the commencement of rehabilitation proceedings.

However, Ssangyong Motor failed to reach a private restructuring agreement under the ARS program by the expiration date of the suspension period, February 28.

Accordingly, on the 2nd of last month, the court issued an advance payment order for costs under the Debtor Rehabilitation and Bankruptcy Act against Ssangyong Motor and on the same day issued a correction order requiring supplementation of the submission of ▲ Mahindra's approval letter from the Reserve Bank of India ▲ LOI or preliminary contract related to investment from U.S. HAAH Automotive ▲ materials related to Ssangyong Motor Company's self-rescue plan. However, Ssangyong Motor failed to submit the LOI by the correction order deadline of the 31st of last month.

HAAH Automotive is still reportedly struggling to persuade investors.

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