SsangYong filed for court receivership last Friday in an attempt to avoid going completely under, as well as to buy time to formulate a rescue package. The company was forced to take this drastic move following 51 per cent stakeholder, SAIC Motor’s, decision to give up its management rights over the company.
The Korean company, which hasn’t had the finance to pay its workers since before Christmas, was hoping that SAIC would offer financial assistance to see it through the immediate cash crisis.
SsangYong’s Chief Executive Zhang Hai Tao and President Choi Hyung-tak have both resigned from their posts as a consequence.
A spokesperson for SsangYong said: “The company has been suffering from a serious liquidity crisis because of plummeting vehicle sales. The company had difficulties in raising funds due to a serious credit crunch globally.”
The company has been suffering from a serious liquidity crisis because of plummeting vehicle sales. The company had difficulties in raising funds due to a serious credit crunch globally
Filing for a receivership agreement will give the company some protection from its creditors, while avoiding bankruptcy.
SAIC has confirmed that it will assist with the proceedings in an atempt to get the company working again, but its a situation that looks similar to that which befell MG Rover back in 2005. If that scenario plays out again in Korea, then the outlook doesn’t look promising.
SAIC initially offered a short term bailout worth £30m in December, but decided against more fundamental measures to secure the future of its offshoot.