SEOUL, April 15 (Yonhap) — Financially ill SsangYong Motor Co. was again put under court receivership Thursday as its Indian parent Mahindra & Mahindra Ltd. has failed to attract an investor amid the prolonged COVID-19 pandemic.
The Seoul Bankruptcy Court approved the debt-rescheduling process for SsangYong Motor as U.S. vehicle importer HAAH Automotive Holdings Inc. didn’t submit a letter of intent (LOI) to acquire the financially troubled carmaker.
Mahindra had been in talks with HAAH to sell its majority stake in the Korean unit as part of its global reorganization plan amid the pandemic.
The court demanded the sole potential investor submit an LOI through SsangYong by March 31, but the U.S. company didn’t send the documents.
This is the second time for the SUV-focused carmaker to be under court receivership after undergoing the same process a decade ago.
Court receivership is one step short of bankruptcy in South Korea’s legal system. In receivership, the court will decide whether and how to revive the company.
SsangYong filed for court receivership in December after failing to obtain approval for the rollover of 165 billion won (US$148 million) worth of loans from creditors. But it obtained a three-month suspension of its obligation to pay the debts due to the talks with HAAH.
Under court receivership, SsangYong’s survival depends on whether there will be a new investor to acquire a “streamlined” SsangYong after debt settlement and other restructuring efforts.
Last week, SsangYong Motor President and Chief Executive Yea Byung-tae stepped down, taking responsibility for failing to attract investment from HAAH.