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Arrears 60 billion won at foreign financial institutions
Korea Development Bank and Woori Bank cannot repay loans
Ssangyong Motors was unable to withstand the liquidity crisis and eventually filed for corporate rehabilitation (receivership) proceedings in court. Ssangyong Motor’s application for corporate rehabilitation has been 11 years since January 2009, when it experienced business difficulties due to the global financial crisis.
On the 21st, Ssangyong Motor held a board meeting and decided on an application for business rehabilitation procedures. On the same day, Ssangyong Motor received a request for corporate rehabilitation procedures, a corporate property preservation provision, and a comprehensive prohibition order at the Seoul Rehabilitation Court.
In addition, Ssangyong Motors also received a request to withhold the start of rehabilitation proceedings (ARS). ARS is a system in which the court confirms the intentions of the creditors and delays the start of the rehabilitation process for up to three months. Companies that have applied for corporate rehabilitation can engage in normal business activities and withdraw their application for corporate rehabilitation under the agreement of interested parties such as creditors. Until a decision is made to start the rehabilitation procedure, the court will issue a full prohibition order for the preservation of the Ssangyong Motor property and will fully judge the ARS.
The application for the business rehabilitation procedure was filed when Ssangyong Motor’s loans worth KRW 60 billion taken from foreign financial institutions such as JP Morgan were past due, and the maturity of loans worth KRW 90 billion taken from the Industrial Bank became uncertain.
On the 15th, Ssangyong Motors announced that it was behind in repaying the principal and interest of JP Morgan, BNP Paribas and Bank of America Merrill Lynch. The total amount in arrears is approximately 60 billion won, and the interest in arrears is 60 million won. Ssangyong Motor was unable to repay the KRW 90 billion in Bank of Korea loans up to this date, the extended maturity date. It also failed to repay the principal and interest of 15 billion won (based on the third and fourth quarters) of the Woori Bank loan, which is due that day. Consequently, Ssangyong Motor’s delinquent principal and interest amounted to 165 billion won, including 60 billion won in arrears at foreign financial institutions.
Ssangyong Motor is struggling with management difficulties, with a 15th consecutive quarter of losses despite the recently launched All-New Rexton, and there is no progress in finding a new investor to replace India’s largest shareholder, Mahindra. Mahindra reaffirmed its position, “We will no longer invest in Ssangyong Motor,” in an earnings announcement on the 10th last month.
Ssangyong Motor held an emergency meeting the same day and decided to take responsibility for the incident and submit a lump sum resignation.
Ssangyong Motor Co., Ltd. said in a statement: “I am very sorry to have caused concern to people, including business partners, sales networks, financial institutions and executives, about the Ssangyong Motor problem.” “All executives submitted a collective resignation and they became a stronger and more competitive company. I will do my best to do so.”
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