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Insolvency protection

Ssangyong Motor files for court receivership, misses loan repayment

By Dec 21, 2020 (Gmt+09:00)

Ssangyong Motor files for court receivership, misses loan repayment

Ssangyong Motor Co. has filed for court receivership after the South Korean unit of India’s Mahindra and Mahindra Ltd. missed a 60 billion won ($55 million) loan repayment to Bank of America and other foreign lenders.

The Korean sport utility vehicle maker said on Dec. 21 that it has filed the request with a Seoul court to suspend all its debt obligations. The automaker, at the same time, requested a three-month grace period before the launch of court-led restructuring in order to continue business operations.

“During the three-month period, we plan to readjust debt repayment with our largest shareholder and creditors, conclude investment talks and then seek to revoke our court receivership,” Ssangyong Motor said in a statement.

If all goes as planned, the company can retract its filing and return to normal business activities. If Ssangyong fails to reach an agreement with related parties over the three months, the court will start looking into the company to determine whether or not to liquidate it.

This is the second time for Ssangyong to place itself under receivership after undergoing the same process in January 2009.


The latest filing comes after the automaker defaulted last week on a loan repayment of about 60 billion won and 60 million won in accrued interest. Of the total due on Dec. 14, about 30 billion won was owed to Bank of America Merrill Lynch, 20 billion won to JPMorgan Chase & Co. and 10 billion won to BNP Paribas.

The carmaker also failed to pay 90 billion won to its main creditor, Korea Development Bank (KDB), and 15 billion won in debt to Woori Bank – both due on Monday.

Falling exports in the absence of new models have dealt a heavy blow to the already troubled Korean automaker. Ssangyong has logged net losses for 15 straight quarters since the first quarter of 2017, with its auto sales steadily declining after peaking in 2016 with 155,844 units.

Its vehicle lineup consists of the flagship SUV, the G4 Rexton, as well as the Tivoli, Korando and Rexton Sports.

In August, KPMG Samjong Accounting Corp., Ssangyong’s auditor, refused to provide its appraisal of the automaker’s financial status – a common practice when the company under audit makes huge losses with mounting debt. Ssangyong could be delisted from the Korea Exchange if its auditor refuses to offer its view again next year.

Ssangyong Motor files for court receivership, misses loan repayment


Analysts said Ssangyong’s filing for court receivership could be aimed at putting pressure on its largest shareholder, Mahindra, which has refused to put fresh funds into the troubled Korean unit after a one-time cash injection of 40 billion won in April. The Indian company earlier promised to provide a total of 230 billion won.

If Ssangyong Motor is liquidated, it will deal a heavy blow to Mahindra and foreign lenders, they said.

Mahindra, which currently owns 75% of Ssangyong Motor after acquiring the Korean company in 2010, has also expressed its intention to give up management rights by lowering its stake below 50% if Ssangyong finds a new investor.

In September, HAAH Automotive Holdings Inc., a US automobile distributor, offered to invest 300 billion won ($258 million) in Ssangyong as part of its bid to acquire a significant stake in the Korean automaker.

Industry watchers, however, questioned HAAH Automotive’s bid, given that the US company posts only 20 billion won in annual sales.

Based in Irvine, California, HAAH Automotive is an auto startup established in 2014 by Duke Hale, a former vice president of Volvo, Mazda, Jaguar and Land Rover.

Write to Il-Gue Kim and Kyung-Min Kang at

In-Soo Nam edited this article.
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