Ssangyong Motor Corporate Rehabilitation Schedule 'Into the Fog'

Submission of Investigation Report Postponed to the 30th of Next Month... Labor Union and KDB Still Inactive

[Image source=Yonhap News]

[Asia Economy Reporter Ki-min Lee] The schedule for Ssangyong Motor's corporate rehabilitation process has become uncertain. As the number of bond claims from Ssangyong Motor creditors unexpectedly increased, conflicts surrounding this issue have escalated. Meanwhile, the labor union, which plays a crucial role in the rehabilitation, and the main creditor bank, the Korea Development Bank, still maintain their original positions, preventing the sale schedule from gaining momentum.

According to industry and legal sources on the 1st, the bond investigation period has been extended, and the deadline for submitting Ssangyong Motor's investigation report by Han Young Accounting Corporation, the investigation committee, has also been extended from the 10th to the 30th of this month. This is because new creditors other than those previously submitted to the court have appeared, delaying bond claims, and the amount of bonds has increased beyond Ssangyong Motor's initial expectations.

With the extension of the investigation report submission deadline, the rehabilitation plan for Ssangyong Motor is also likely to be delayed. Earlier, the Seoul Rehabilitation Court initiated Ssangyong Motor's corporate rehabilitation procedure in April and ordered court-appointed manager Yong-won Jeong to submit a rehabilitation plan based on the investigation report by July 1. However, the revised investigation report submission deadline and the existing rehabilitation plan submission deadline are only one day apart, making it physically impossible. Recently, Manager Jeong announced plans to issue a sale bid notice by the end of this month and receive letters of intent by the end of July.

Furthermore, the sale process is expected to be completed through a preliminary due diligence at the end of August, selection of preferred negotiation candidates in September, and price negotiations in October, but these are also expected to be postponed sequentially.

Some suggest that the failure to submit materials on Ssangyong Motor's restructuring and labor cost reduction plans is also a factor in the extension of the investigation report submission deadline. Ssangyong Motor announced last month that it would reduce 38% of executives to cut costs, but has yet to explain specific plans regarding employee restructuring. As of the end of last year, Ssangyong Motor's public claims stood at around 370 billion KRW, but with the initiation of the rehabilitation process, the entire employees' retirement allowances amounting to about 300 billion KRW were also tied up as public claims. Because of this, even if the sale process begins in earnest, it could become a management burden for the acquiring company, and without support from the government and the Korea Development Bank, the bidding itself may falter.

However, the labor union and the Korea Development Bank, who hold the key to Ssangyong Motor's rehabilitation, continue to be at an impasse. The Ssangyong Motor labor union, which recently marched on foot for 3 nights and 4 days from the Pyeongtaek plant to the National Assembly demanding job retention and government support, reportedly met with Financial Services Commission Chairman Eun Sung-soo at the National Assembly yesterday to urge support for business normalization. An industry insider said, "Cooperation from both the labor union and the Korea Development Bank is important, but neither side is willing to compromise," adding, "Only precious time needed to save Ssangyong Motor is passing by."

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