Creditors including San Eun "Strive to Establish a Plan for Ssangyong Motor Normalization"

"Early Resolution of Ssangyong Motor's Liquidity Issues Before Rehabilitation Proceedings"
Creditors Expected to Contribute to Finding a 'New Owner' for Ssangyong Motor

[Image source=Yonhap News]

[Asia Economy Reporter Kangwook Cho] The movement of creditors, including the Korea Development Bank, is becoming active following Ssangyong Motor's application for corporate rehabilitation. Since Ssangyong Motor also applied for the Autonomous Restructuring Support (ARS) program, they plan to strive to establish the best normalization plan before the commencement of the rehabilitation procedure.

According to the financial sector on the 22nd, creditors such as the Korea Development Bank are closely monitoring the court's decision and have stated that they will play a role if a rehabilitation program is prepared.

A creditor representative said, "Once the rehabilitation procedure is applied for, all creditor-debtor relationships are frozen," adding, "We will have to make a judgment after seeing the court's decision." However, they added, "If the court devises a rehabilitation program, the creditors will be able to play a role."

Ssangyong Motor applied separately for the ARS program, which is a request to defer the commencement of the rehabilitation procedure. The ARS program is a system where the court confirms the intentions of creditors and can postpone the start of the rehabilitation procedure for up to three months.

A Korea Development Bank official said, "We will discuss with other creditors to find the best normalization plan," and added, "We will contribute to resolving Ssangyong Motor's liquidity issues early before the rehabilitation procedure begins."

If the court judges that the liquidation value is greater than the value of continuing the business, Ssangyong Motor will undergo liquidation procedures. In this case, debts will be repaid according to the priority set by the court, but since Ssangyong Motor has recorded losses for 15 consecutive quarters, it is highly likely that creditors will not recover the full principal and interest of their loans. On the other hand, if liquidity issues are resolved through maintaining new investors, Ssangyong Motor can withdraw the rehabilitation procedure before its commencement. Accordingly, there are market expectations that creditors will actively support finding a new owner for Ssangyong Motor.

The Ministry of Trade, Industry and Energy, the Financial Services Commission, and other government bodies stated the previous day, "Despite the application for rehabilitation procedures, negotiations for the sale of Ssangyong Motor are still ongoing," and added, "We especially expect good results through the active cooperation of the major shareholder Mahindra, related stakeholders, and domestic and foreign creditors."