Ssangyong Motor Rehabilitation Plan Faces Opposition from Trade Creditors... "Low Repayment Rate"

Rehabilitation Creditors Protest "1.75% Repayment Rate Too Low"

[Image source=Yonhap News]

[Asia Economy Reporter Moon Chaeseok] Ssangyong Motor's rehabilitation creditors have cast opposing votes against the rehabilitation plan prepared 10 months after the commencement of corporate rehabilitation proceedings. The reason is that the repayment rate is too low at 1.75%. Attention is focused on the court's final approval decision.

According to the automotive industry on the 2nd, major company representatives of Ssangyong Motor's trade creditors held an emergency meeting on the day and decided to oppose Ssangyong Motor's plan. Earlier, Ssangyong Motor submitted the plan to the Seoul Rehabilitation Court on the 28th of last month. According to the plan, Ssangyong Motor intends to repay only 1.75% of the approximately 547 billion KRW rehabilitation claims in cash and convert 98.25% into equity. Ssangyong Motor's administrator Jeong Yong-won sought the consent of the creditors, but it is known that the creditors conveyed that it was difficult to agree due to the low repayment rate. The trade creditors' representatives plan to submit an opposition statement reflecting the positions of 430 member companies to the court soon.

Due to the opposition of the trade creditors, the possibility of the plan being rejected at the stakeholders' meeting scheduled for the 1st of next month has increased. At the meeting, the plan must obtain the consent of at least three-fourths of the rehabilitation secured creditors, two-thirds of the rehabilitation creditors, and half of the shareholders to receive the court's final approval. Among the 547 billion KRW rehabilitation claims of Ssangyong Motor, trade claims amount to 380.2 billion KRW. If trade creditors, who hold 83.21% of the voting rights, cast opposing votes at the stakeholders' meeting, the possibility of the plan being rejected increases. A trade creditor representative said, "The rehabilitation plan does not feel sincere," adding, "It is unreasonable that the acquirer takes 90% of the shares while the creditors are unilaterally sacrificed."

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