A South Korean court said today it has accepted Ssangyong Motor Co.'s request for protection from creditors, buying time for the troubled Chinese-owned manufacturer of light SUVs to restructure itself into a profitable automaker.
The Seoul Central District Court accepted Ssangyong's application to rehabilitate under court protection, said court spokesman Hong Jun-ho.
Hong also said the court named former Hyundai Motor Co. executive Lee Yoo-il and Ssangyong executive Park Young-tae to run Ssangyong.
The company is majority-owned by Shanghai Automotive Industry Corp., one of China's largest vehicle manufacturers. Ssangyong filed for court receivership, or bankruptcy protection, last month amid falling sales and mounting red ink.
Ssangyong, which has annual production capacity of 200,000 vehicles and 7,100 employees, is South Korea's fifth-largest automaker, manufacturing mostly SUVs and a luxury sedan, the Chairman.
Ssangyong is far smaller than domestic rivals Hyundai Motor and Kia Motors Corp. Its troubles have drawn attention, however, as they come amid turmoil in the world auto industry, which has been rocked by plunging demand for vehicles as a result of the global financial crisis.
Ssangyong said last month its board has come up with a number of measures to cut costs such as seeking voluntary retirement and wage cuts for the next two years, among others steps.
SAIC, which took over Ssangyong in 2004 and owns 51.33 percent of the company, is a partner of General Motors Corp. and Volkswagen AG.
Trading in Ssangyong's shares, which fell nearly 85 percent last year, was suspended upon last month's court filing. Its then president, Choi Hyung-tak, resigned on the day of the filing.
(Shanghai Daily February 6, 2009)