|SsangYong Motor's Tivoli vehicles are lined up for sale in Pyeongtaek, Gyeoggi Province, in this file photo on Feb. 3. Yonhap|
By Lee Min-hyung
SsangYong Motor is likely to enter court receivership as early as today, as the Korea Development Bank (KDB), the main creditor of the cash-strapped firm, is set to approve court-led restructuring after the firm failed to secure any new investments.
The move came after the ailing company de facto failed to sign an investment contract with U.S. car retailer HAAH Automotive, its latest negotiating partner, leaving the KDB with no other choice but to reach an agreement with the court over the legal procedure.
"We are fine-tuning the details with some other creditors before submitting our opinion to the court," a spokesman at the state-run lender said.
Upon receiving an opinion from the KDB, Seoul Bankruptcy Court will start the restructuring process for SsangYong before the end of the week.
Under the court-led restructuring, the company will be able to avoid filing bankruptcy only if it finds a new potential buyer. Given that HAAH was supposed to pay 280 billion won ($251 million) for SsangYong, any new investor will be able to take over the automaker outright if they can invest between 200 billion won and 300 billion won.
The court will directly handle the restructuring process, with the KDB having less leeway to intervene in the process.
On Wednesday, SsangYong Motor CEO Yea Byung-tae stepped down amid the weakened hopes for the automaker to clinch a deal with HAAH.
"I felt a sense of responsibility as a leader of the company for the ongoing situation that has led the company to face another court receivership," he said in a message to employees.
But he urged staff not to give up hope at a time when a number of companies are still expressing interest in buying the firm.
"Even if negotiations with an existing potential investor are delayed, we should never lose a glimmer of hope. It is premature for us to fall into despair, as many investors have still expressed their intention of taking over SsangYong."
The abrupt leadership vacuum, however, is expected to add more uncertainty to the collapsing automaker in the case it fails to reach an agreement with any other potential buyer.
The court asked the automaker to submit a letter of intent or any other legal document proving any forthcoming investment from HAAH by the end of March.
If SsangYong attracts a new investor and draws enough capital, the main creditor will also likely inject a similar amount of money for SsangYong's revival. SsangYong is expected to continue its business for about two years with the combined investment worth 500 billion won from the investor and creditors.
The government and the state-run lender do not want the automaker to file for bankruptcy amid fears of its subsequent economic impact here, as this will leave hundreds of thousands workers from SsangYong and its subcontractors jobless.