Court on Ssangyong Motor Resale Prohibition Injunction Case... "Written Submissions Accepted Until Next Month 6, Decision Pending"

by Choi Sukjin

Published 15 Apr.2022 14:28(KST)

Front gate view of Ssangyong Motor Pyeongtaek Plant in Pyeongtaek-si, Gyeonggi-do. [Image source=Yonhap News]

[Asia Economy Reporter Choi Seok-jin, Legal Affairs Specialist] The outcome of the provisional injunction case filed by Edison Motors to block the resale of Ssangyong Motor is expected to be announced after the 6th of next month.

The 50th Civil Division of the Seoul Central District Court (Chief Presiding Judge Song Kyung-geun) held a hearing on the 15th regarding the provisional injunction case filed by Edison EV and Edison Motors against the Ssangyong Motor administrator to prohibit the sale process and suspend the effect of contract termination, stating, "If written submissions are submitted by the 6th of next month, a conclusion will be reached thereafter."

After confirming the positions of both parties, the court concluded the hearing that day. The provisional injunction will be finalized without scheduling a separate date after the hearing, with the court notifying both parties of the decision.

During the hearing, the representatives of Edison EV and Edison Motors argued, "Even if one party has an obligation to perform first in a bilateral contract relationship, if the other party's obligation is not fulfilled, the right to raise the defense of insecurity can be exercised." They added, "Edison EV, Ssangyong Motor, and the sale lead manager agreed to postpone the creditors' meeting, but Ssangyong Motor ignored this and notified the contract termination. This constitutes a violation of good faith or an abuse of rights."

On the other hand, the representatives of Ssangyong Motor pointed out, "Edison EV is currently a company facing delisting and is unable to manage its own affairs," and said, "They simply failed to pay the remaining balance."

They further argued, "If the provisional injunction is granted and the sale process is halted, Ssangyong Motor will suffer enormous damage."

Edison EV formed a consortium and signed a merger and acquisition (M&A) investment contract with Ssangyong Motor in January, but failed to pay the remaining balance of 274.3 billion KRW, excluding the deposit of 30.5 billion KRW, by the payment deadline of the 25th of last month, and Ssangyong Motor notified the contract termination.

On the same day, the Seoul Bankruptcy Court accepted Ssangyong Motor's application and permitted the re-pursuit of M&A before the approval of the rehabilitation plan, but if the court grants the injunction to prohibit the sale, Ssangyong Motor's sale process will inevitably be halted.