Kumho Tire's 200 Billion Won Ordinary Wage Ruling Decided in November, Affecting Company's Survival

The 5th Hearing of the Remand Trial Proceeded

[Asia Economy Reporter Kiho Sung] The Kumho Tire lawsuit over ordinary wages, amounting to 200 billion won, is expected to have its final verdict in November. If the court sides with the workers again, the company will inevitably face significant managerial difficulties, drawing keen attention to the outcome of the ruling.

According to the automotive industry on the 8th, the Gwangju High Court held the 5th hearing of the remand trial for the ordinary wage bonus lawsuit filed by five current and former Kumho Tire employees the day before.

In the trial, Kumho Tire argued a violation of the "principle of good faith," claiming that if they lose the lawsuit, the company's existence could be at risk. On the other hand, the workers argued that the company's predictions were merely assumptions and that even if ordinary wages were paid, there would be no significant managerial problems. With the final arguments from both sides concluded, the court decided to hold the verdict hearing on November 16.

The Kumho Tire ordinary wage lawsuit began when current and former employees raised the issue that the regular bonuses in 2013 should be included in ordinary wages. The period in question raised by the workers spans from January 2012 to May 2014, during which Kumho Tire was undergoing a workout process.

In the first trial, the plaintiffs partially won. In the second trial, the court sided with the company, stating that the additional wage claims requested by the plaintiffs greatly exceeded the existing wages agreed upon by labor and management, potentially threatening the company's survival. However, the Supreme Court overturned the lower court's ruling, stating that it was difficult to see the additional wage payments as causing significant managerial difficulties, and sent the case back to the Gwangju High Court.

The industry expects that depending on the verdict, the additional amount Kumho Tire may have to pay could reach up to 200 billion won. Although the lawsuit was filed by five current and former workers, there are many related lawsuits.

If the company loses, it could suffer severe damage. As of the end of last year, Kumho Tire's cash reserves were less than 100 billion won. Therefore, if an additional burden of 200 billion won arises, there is a high possibility of facing a default situation due to liquidity deterioration.

Also, a debt maturity of about 1 trillion won is scheduled for the end of this year. If the company loses the lawsuit, combined with the debt amount, there is a forecast that in the worst case, Kumho Tire could again face a workout or court receivership crisis.

An industry insider explained, "Although the estimated sale value of Kumho Tire's Gwangju factory site is 1.4 trillion won, relocating the factory is expected to cost more than 1.2 trillion won," adding, "Since commercial site changes must be made, it is not easy to pay ordinary wages through site sales."

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