News - SsangYong
Ssangyong seeks court receivership
South Korean car-maker Ssangyong becomes the first victim of the global recession
9 Jan 2009
TROUBLED South Korean automaker Ssangyong Motor today filed for court receivership to cope with liquidity problems and avoid bankruptcy.
According to news agency Reuters, the car-maker is the first to fold under the weight of the global recession and the move has rocked the corporate world.
Trading in the company, South Korea's fifth-largest carmaker, was suspended this afternoon.
Ssangyong said in a statement that it made the “unavoidable choice” to file for court receivership to “deal with an urgent liquidity crisis and transform itself into a company with sustainable growth”.
The decision came at a meeting yesterday of its board of directors in China, where its parent company Shanghai Automotive Industry Corporation is based. SAIC took over Ssangyong in 2004 and owns 51.33 percent of the company.
According to Associated Press, the process of court receivership in South Korea is meant for companies that have gone bankrupt or are on the verge of doing so and, if approved, freezes their debts.
Ssangyong said in its statement that the board has come up with a number of measures to cut costs, such as seeking voluntary retirement, wage cuts for the next two years and provisional suspension of welfare support, among others.
“The board expects such measures to improve the financial structure of the company,” said the company statement.
Recent news reports have claimed that Ssangyong plans to slash more than 3000 jobs, including half of its 5200 assembly line workers.
This had caused the union, which is opposed to restructuring efforts, to vote earlier this week on a strike motion, but the ballots remained uncounted while the workers awaited the outcome of the board meeting.
Ssangyong, which has annual production capacity of 200,000 vehicles and 7100 employees, posted a net loss of 98.1 billion won ($74.1 million) in the first nine months of last year amid weakening domestic demand for SUVs like the Rexton, Kyron and Actyon – the company’s mainstay vehicles.
In Australia last year, Ssangyong sales dropped 35.4 per cent from 2123 units to 1372.
The Australian franchise was taken over only two months ago by Malaysian-based company Sime Darby, which also distributes Peugeot in Australia.
The new company began trading under the name of Ssangyong Motors Australia from November after former principals Russell Burling and Vince Barbagallo announced in September that they were relinquishing the Australian distribution rights.
As reported at the time, Mr Burling continued to be the Ssangyong distributor and retailer in New Zealand via his Rapson Holdings enterprise, while Mr Barbagallo retained his Ssangyong dealership in Perth.
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