SsangYong had defaulted on a loan payment worth 165 billion won (US$148 million) on December 21, 2020, following which it applied for court receivership. However, the company was given three months to secure funds after saying it was in talks with US-based HAAH
Seoul Bankruptcy Court has put Korean auto company under court receivership after its Indian parent Mahindra & Mahindra failed to find a suitable buyer for the beleaguered firm. SsangYong had defaulted on a loan payment worth 165 billion won (US$148 million) on December 21, 2020, following which it applied for court receivership. However, the company was given three months to secure funds after saying it was in talks with US-based HAAH.
It has also applied for an autonomous restructuring support (ARS) programme, a court-designed process. The Mumbai-based Mahindra & Mahindra holds a 75 per cent stake in the South Korean SUV manufacturer.
"We plan to promote the early termination of the rehabilitation process through the completion of the M&A, such as selecting an advisor in the shortest possible time in consultation with the Seoul Bankruptcy Court," SsangYong said in a statement.
The debt-rescheduling process for SsangYong was approved after US-based auto company HAAH Automotive Holdings Inc fails to submit a letter of intent to buy SsangYong. M&M was earlier in talks with HAAH to buy its stake in SsangYong, though the company didn't send the documents about the letter of intent.
Before this, SsangYong, which focuses on making SUVs, had gone into court receivership a decade ago when M&M acquired it in 2010.
Accounting firm EY Hanyoung will conduct the due diligence to assess the carmaker's financial status, including debt obligation, Korean News agency Yonhap quoted court spokeswoman Kim Joo-mi as saying. EY Hanyong will submit the report by June 10.
In December 2020, M&M had informed the bourses that SsangYong Motor Company missed repayments of loans aggregating to 60 billion Korean wons (around Rs 408 crore).
The Korean automaker has outstanding loans aggregating to 100 billion Korean wons (around Rs 680 crore) from Seoul-based branches of JP Morgan Chase Bank, BNP Paribas and Bank of America.
Already, JP Morgan has sought repayment of loan worth 40 billion Korean wons from SYMC and the South Korean automaker has expressed its inability to pay the amount now. Considering its financial position and performance, the M&M board had rejected a proposal to inject any fresh equity into SYMC in April 2020.