SsangYong Defaults On Loan Repayments, Files For Bankruptcy
The firm has filed for commencement of rehabilitation procedure with the Seoul Bankruptcy Court.
SsangYong Motor Company, the South Korean subsidiary of Mahindra & Mahindra, has filed for bankruptcy.
The loss-making automaker had defaulted on loan repayments last week, with the amount aggregating to 60 billion won (about Rs. 400 crores). The firm has outstanding loans to the tune of 100 billion won (Rs. 668 crores) at present.
Mahindra, in a regulatory filing, has noted that SsangYong has filed an application for commencement of rehabilitation procedure under the Debtor Rehabilitation and Bankruptcy Act of South Korea with the Seoul Bankruptcy Court.
Further, it has also applied for an Autonomous Restructuring Support (ARS) programme with the court, which if approved, will ensure that SsangYong continues to function with supervision from its board.
Also, it will give time for the carmaker to come up with a revival package by negotiating with stakeholders, which, Mahindra says, may include equity, debt financing, among other related actions.
However, SsangYong will not be free to do everything, for, some of its decisions will be subject to approval from the court.
It was a decade ago when Mahindra acquired the loss-making South Korean carmaker. The Indian firm holds nearly 75 percent stake in SsangYong and has invested $110 million (Rs. 813 crores) in it.
In 2016, SsangYong posted a net profit of 58 billion wons (Rs. 387 crores). But, since 2017, the firm has slipped into the red with a net loss of 66 billion wons (Rs. 441 crores).
Two years later, in 2019, the automaker’s net loss worsened, touching 341 billion wons (Rs. 2278 crores). Consequently, in April this year, Mahindra’s board rejected a proposal to inject fresh equity into SsangYong.
Source – PTINews.com