South Korea’s Ssangyong Motor Co. is temporarily suspending production at its main plant due to disruptions of auto parts supplies from its contractors, two days after the automaker filed for court receivership.
Ssangyong Motor, the Korean unit of India’s Mahindra and Mahindra Ltd., said in a regulatory filing on Dec. 23 that it will halt operations at its factory in Pyeongtaek, south of Seoul, on Dec. 24 and Dec. 28.
The move comes as five of its contractors, including Hyundai Mobis Co., S&T Dynamics Co. and LG Hausys Ltd, refused to supply auto parts, it said.
A Ssangyong Motor official said the company plans to resume operations on Dec. 29 through negotiations with its parts suppliers, but the schedule is “flexible, depending on the result of talks with them.”
The automaker’s decision to halt operations comes after it sought insolvency protection on Monday by filing for court receivership to put all its debt obligations on hold.
UNIONIZED WORKERS DEMAND JOB SECURITY
While filing the request with a Seoul court on Dec. 21, the sport utility vehicle maker said it aims to revoke its receivership request and return to normal operations within three months after rescheduling its debt repayment with its creditors. Ssangyong defaulted last week on a loan repayment of about 60 billion won ($55 million) and 60 million won in accrued interest. Of the total due on Dec. 14, about 30 billion won was owed to Bank of America Merrill Lynch, 20 billion won to JPMorgan Chase & Co. and 10 billion won to BNP Paribas.
The carmaker also failed to pay 90 billion won to its main creditor, Korea Development Bank (KDB), and 15 billion won in debt to Woori Bank – both due on Monday.
Ssangyong’s labor union said in a statement on Wednesday that the unionized workers will not oppose the company’s decision to put it under receivership as long as their employment is guaranteed.
The court is considering whether or not to accept the automaker’s request for receivership.
Write to Il-Gue Kim and Jeong Min Nam at Black0419@hankyung.com In-Soo Nam edited this article.
