Court Appoints Executive Director Jeong Yong-won as Administrator
[Asia Economy Reporter Seongpil Cho] Ssangyong Motor, which is on the brink of survival, has once again entered rehabilitation proceedings by court decision. It has been 10 years since it graduated from court receivership in March 2011.
The Seoul Bankruptcy Court Rehabilitation Division 1 (Presiding Judge Kyunghwan Seo) decided to commence rehabilitation proceedings for Ssangyong Motor on the morning of the 15th. Ssangyong Motor will undergo rehabilitation under the supervision of a court-appointed administrator. The court appointed Yongwon Jeong, Ssangyong Motor’s Head of Planning and Management Division (Executive Director), as the administrator. Following the decision to commence rehabilitation proceedings, creditors, secured creditors, and shareholders must submit their lists from that day until the 29th. Claims for rehabilitation debts, secured claims, and stock reports must be filed at the Seoul Bankruptcy Court’s General Civil Affairs Office from the 30th until the 13th of next month. However, failure to report rights within this period may result in loss of those rights.
The court will commission an investigation committee to conduct a detailed audit of Ssangyong Motor’s financial status, including accounting inspections. Han Young Accounting Corporation has been appointed as the investigation committee. Based on these results, the administrator will prepare a detailed rehabilitation plan by July 1. If the creditors approve the rehabilitation plan at the upcoming creditors’ meeting and the court also confirms it, Ssangyong Motor will proceed with the plan and move toward normalization.
However, it remains uncertain whether Ssangyong Motor can achieve management normalization. Previously, Ssangyong Motor fell into a liquidity crisis after failing to repay 165 billion KRW in matured debts, leading to the current corporate rehabilitation application. If the scale of insolvency is found to be more severe than known and the rehabilitation value is deemed insufficient, creditors may reject the plan. In that case, liquidation proceedings cannot be ruled out.
When Ssangyong Motor applied for corporate rehabilitation in December last year, it also applied for the Autonomous Restructuring Support program (ARS), which postpones the commencement of proceedings for three months. However, HAAH Automotive, the prospective buyer, did not submit a Letter of Intent (LOI) by the court’s deadline (end of March), and the court notified Ssangyong Motor that it could no longer delay the process. The court then proceeded to confirm opinions on the commencement of rehabilitation proceedings and appointment of an administrator with the creditors’ council and management committee. Both parties reportedly submitted their statements the day before.
Ssangyong Motor previously underwent court receivership once in 2009. Following the global financial crisis triggered by the 2008 subprime mortgage crisis, it faced severe management difficulties and applied for corporate rehabilitation in January 2009, resulting in the layoff of about 2,600 employees. Ssangyong Motor graduated from court receivership in 2011, but the layoff issue was only resolved in 2018 when all dismissed workers were reinstated.
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