SEOUL– The Seoul Bankruptcy Court said Wednesday it has accepted SsangYong Motor Corp.’s request to extend the deadline for its rehabilitation plan by two months until Sept. 1 considering its ongoing sales process.
The bankruptcy court in April put the debt-laden automaker under court receivership, a step short of bankruptcy, and ordered it to submit its rehabilitation plan by July 1.
On Monday, SsangYong opened an auction for its majority stake after its Indian parent Mahindra & Mahindra failed to find a new investor for the money-losing Korean unit amid the pandemic and its worsening financial status.
EY Han Young, an accounting firm in charge of the sale process, said it will accept letters of intent from potential buyers until the end of July and conduct preliminary reviews on them in August.
Court-appointed administrator Chung Yong-won said last month that the company aims to select a preferred bidder in late September and enter price negotiations in October, but it remains unclear whether the automaker can find a new investor within the timeframe due to its heavy debt and weak sales.
The SUV-focused carmaker filed for court receivership in December after defaulting on 165 billion-won (US$148 million) loan payment to the state-run Korea Development Bank and several other banks.
SsangYong’s sales fell 19 percent to 107,416 vehicles last year, and its annual net loss widened to 423.5 billion won from 281.9 billion won from a year earlier due to sluggish sales.
U.S. vehicle importer HAAH Automotive Holdings Inc. had expressed interest in the preliminary process but did not officially submit its bid.
Other potential bidders include local electric bus maker Edison Motors, small electric vehicle maker K Pop Motors and Park Seok-jeon & Co., a local private equity fund.
As part of self-help measures, SsangYong said half of its 4,500 workers will go on unpaid leave for two years beginning Thursday and it will further sell assets to streamline its structure.
Source: Yonhap News Agency