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Ssangyong Motors went to the Seoul Rehabilitation Court to initiate rehabilitation proceedings. On the 21st, Ssangyong Motor received a request for the start of the rehabilitation procedures, a request for the preservation of corporate property, a request for a comprehensive injunction and a request to withhold the start of the rehabilitation procedures.
It’s a complicated story, but since he couldn’t repay the money he had borrowed and couldn’t live alone, he petitioned the court to freeze his debt. If the rehabilitation process is not accepted or if no new investors are found in three months, Ssangyong Motor is in a desperate situation that may disappear.
Ssangyong Motor has a history of applying for corporate rehab in 2009. The sale was announced in 2010, and that same year, India Mahindra and Mahindra were selected as the preferred negotiators, and the main contract was signed and the corporate rehab procedure finalized in 2011. However, Mahindra, which acquired Ssangyong Motor, was reluctant to invest directly by requesting government funds. All Mahindra has invested in Ssangyong Motor in the meantime was 40 billion won, which was invested in a one-time special fund in April this year.
Mindra, whose management situation has deteriorated due to the Corona 19 spread, has also stated that there is no new investment. In the midst of this, Ssangyong’s capital liquidity crisis began with a KRW 90 billion loan, which matures in July. Although the Korean Development Bank extended the maturity, it was unable to pay off the 60 billion won debt of foreign banks such as JP Morgan, which had expired on the 15th, and ultimately requested corporate rehabilitation procedures.
Mahindra, the main shareholder, is responsible for getting to the point of Ssangyong Motor’s request for corporate rehab procedures. Although it said it would take over the loans from foreign banks, it did not take any action and did not make a new investment worth 230 billion won, which was promised this year. Meanwhile, key technologies from Ssangyong have been transferred to Mahindra, as have Shanghai trains in China before.
Although Tivoli’s success in 2015 showed hope for management normalization, Ssangyong Motor suffered a deficit for 15 consecutive quarters since 2017. A Ssangyong Motor official said: “I had the opportunity not to go to corporate rehab, but Mahindra persisted in not leaving the position as majority shareholder and broke “.
Ssangyong Motor has been negotiating with US startup HAAH Automotive Holdings as it sought a new acquirer, but Mahindra insisted on retaining its stake, making it impossible to move forward. Ssangyong Motor hopes that there is still room for negotiation with HAAH and that, at the same time, it has applied for the ‘Autonomous Restructuring Assistance Program (ARS)’, which will delay the start of legal management by up to three months.
If a new investor or acquirer emerges during this period, it is believed that business can be resumed through negotiations with creditors. Although they hope for the silly hope, the executives and employees of Ssangyong Motor do not hide their confused expressions. One employee said: “Executive salaries were cut and employees tried to save the company by risking a freeze, but it collapsed.”
Another employee said: “As the recently launched Rexton partial shift model got a good response, if Mahindra helped me a bit, I might not go to the rehab request. “Even if the rehabilitation application was accepted, it was acquired by foreign capital. When it happens, there is even anxiety about not knowing when that crisis will come,” he said.
In the history of the Korean auto industry, Ssangyong Motor has had its ups and downs. Although it was acquired by Daewoo Motors without overcoming the financial crisis in 1997, it was destined to be sold to Shanghai, China by train in 2004, following corporate improvement work (training) with the dissolution of the Daewoo Group in 1999. However, The Shanghai train left only Ssangyong’s technology and manpower, sparking a fierce confrontation between workers and management, including a strike against the unions.
Ssangyong Motor was taken over by Bridge Mahindra and Mahindra after twists and turns, and ran into a surplus in 2016.However, after getting stuck in Corona 19, Ssangyong fell into the biggest crisis ever to enter the rehab process again.
Ssangyong Motors said: “I am very sorry for the people, including stakeholders, including business partners, sales networks, financial institutions and employees,” immediately after the request for the start of the rehabilitation process. “Through an emergency meeting, all the executives presented collective resignations and a stronger and more competitive company. “I will do my best to transform it into a new product.”
In the industry, there are complicated talks about the application to start the rehabilitation process of Ssangyong Motor, but it is believed that it will go back up as it did before. It won’t be easy, but the Rexton partial swap is selling well, and electric cars scheduled for next year are likely to come out. Based on this, I sincerely hope that Ssangyong Motor will come back to life.
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