SsangYong still trading amid bankruptcy threat

SsangYong has moved to reassure Australian vehicle owners and prospective buyers that it is business as usual for the time being after the South Korean car-maker filed for court protection from bankruptcy this week.

Coming six months after SsangYong Motor’s parent Mahindra revealed that it was looking to sell off its 75 per cent stake in the Korean brand in the wake of mounting losses and deteriorating sales, SsangYong’s latest court filing was triggered when it defaulted on a loan repayment of 60 billion won ($A71.68 million) “due to worsening business conditions”.

SsangYong has now applied for a “private restructuring support program” through the South Korean judicial system, which will give the car-maker up to three months to negotiate with stakeholders, including creditors, while trading as normal.

In a statement, SsangYong Australia managing director Chris Mandile said the private rehabilitation program “will allow SsangYong to restructure the business as it works with creditors to try and complete the sale process which has been ongoing for some time”.

“Should an agreement not be met in this timeframe the company would then enter voluntary administration, allowing for a forced restructure of the organisation,” Mandile said.

“It is the intention of the company to use the three-month period of rehabilitation to avoid this.

“During this period, SsangYong Motor Company, including the Australian subsidiary, remains fully operational, business as usual.

“The company will also accelerate its efforts towards securing a deal with the interested new investor – another step in the transformation and rebirth of SsangYong into a competitive company,” he said.

Mandile emphasised that the Korean administration processes is similar to the American Chapter 11 administration process, which is used to help a business restructure and improve its position prior to being sold off.

“SsangYong and the Korean government is committed in making every effort to secure a viable future for everyone involved with this proud company,” he said.

In Korea, a SsangYong Motor spokesperson said: “We very much regret this situation which is the result of the difficulties being experienced from the worldwide COVID-19 situation, and the concern caused to our partners and stakeholders, especially our employees, sales networks and financial institutions.

“We are making every effort to transform the situation, and to build a more robust and competitive company for the future.”

SsangYong’s global sales are down more than 20 per cent this year, while in Australia the brand has recorded 1483 new vehicle registrations to the end of November.

The SsangYong Musso ute is its main local contender with 891 sales for the year to date, followed by the Rexton large SUV (277) and Korando mid-size SUV (223).