Mahindra's Korean subsidiary Ssangyong Motor files for bankruptcy

Move comes a week after the troubled automaker defaulted on a loan repayment to JP Morgan

SsangYong Motor Company (SYMC), the South Korean subsidiary of Mahindra and Mahindra (M&M), on Monday informed the Korean Stock Exchange regarding the commencement of the rehabilitation procedure with the Seoul Bankruptcy Court, M&M said in a notification to the stock exchanges.

The development comes a week after the struggling automaker missed the repayment of Rs 480 crore (60 billion Korean Won) to JP Morgan Chase Bank, South Korea, which was due and payable on December 14.

SYMC has also applied for an Autonomous Restructuring Support (ARS) programme which is a court-designed process, the notification said.  “If the court approves the ARS, SYMC 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,” M&M said in the statement.

The Seoul Bankruptcy Court will deliberate on and review the application and relevant documents submitted by SYMC to determine if the restructuring process of SYMC can commence. SYMC has also applied for disposition of property preservation and an order of comprehensive prohibition.

As part of the rehabilitation process, the court, while admitting SYMC’s application, will issue a comprehensive stay or prohibition order. This is to prevent SYMC’s creditors from enforcing any security claims, and a preservation order for SYMC not to engage in any disposal of property or assets without the court’s approval so as to adversely impact the interests of the creditors.