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Insolvency protection

Ssangyong Motor gets extended grace period before court-led revamp

Feb 26, 2021 (Gmt+09:00)

Ssangyong Motor gets extended grace period before court-led revamp

Ssangyong Motor Co. has received court approval to extend the two-month suspension of its debt obligations and find a new investor for the South Korean unit of India’s Mahindra and Mahindra Ltd.

According to the Korean automaker on Feb. 26, a Seoul court has decided to allow the troubled carmaker to conclude investment talks with HAAH Automotive Holdings Inc., a US automobile distributor, by the middle of March.

If talks fail, Ssangyong Motor will be placed under court-led restructuring, which includes possible liquidation.

“Apparently, the court is giving Ssangyong more time after confirming HAAH’s intention to buy into the carmaker’s stake,” said an industry official.

In December of 2020, Ssangyong filed for court receivership after it defaulted on a loan repayment of about 60 billion won plus 60 million won in accrued interest to Bank of America and other foreign lenders.

But the Seoul court granted a two-month reprieve to Ssangyong, allowing it to suspend debt repayments until the end of February to help it find a new investor.

Last month, industry sources said HAAH Automotive plans to inject $250 million into Ssangyong Motor for a 51% stake.

The Indian owner earlier refused to inject fresh funds to keep its Korean unit afloat and said it is willing to give up its management rights if Ssangyong finds a new investor.

Write to Byung-Uk Do and Jeong Min Nam at dodo@hankyung.com

In-Soo Nam edited this article.

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