Shweta Tambade
SsangYong Motor Co. (SYMC), South Korean subsidiary of Mahindra & Mahindra Ltd. has applied for the commencement of rehabilitation procedure with the Seoul Bankruptcy Court under the Debtor Rehabilitation and Bankruptcy Act of South Korea.
The move came after SsangYong agreed with its inability to repay loans of about 60 billion Korean won, or ₹408 crores, which was due and payable on 14 December to lenders, including JPMorgan Chase, Bank of America, and BNP Paribas.
Parent company M&M said in a filing to BSE:
“SsangYong has also applied for an Autonomous Restructuring Support (ARS) program, which is a court-designed process.”
“If the court approves the ARS, SsangYong will continue to function under the supervision of its Board and will negotiate with stakeholders to reach an understanding about a revival package, which may include equity and debt financing and other related actions.”
The Seoul Bankruptcy Court will deliberate and review the application and relevant documents submitted by SYMC to determine whether or not the court will commence the restructuring process of SYMC.
In a letter dated 12 September previously, M&M had submitted that over 98% of shareholders had accepted the company’s decision to transfer/dilution or termination of controlling stake in its Korean subsidiary SsangYong.
This happened when the Indian vehicle manufacturer failed to reverse the fortunes of SYMC under its long ownership.
It has collected operating losses of 309 billion Korean won (close to ₹2,100 crores) during the three quarters ending September in 2020 despite cutting down the costs.