Rehabilitation Plan Unlikely to Win Court Approval
SsangYong Motor’s commercial creditors have opposed Edison Motors’ acquisition of the troubled automaker, demanding that the company find a new investor.
The commercial creditors filed a petition with the Seoul Rehabilitation Court to express their opposition to the takeover of the insolvent automaker by the Edison Motors consortium.
SsangYong Motor's 344 partners formed a commercial creditor group to secure their receivables.
Earlier, SsangYong Motor submitted a rehabilitation plan to the court that included a scheme to repay only 1.75 percent of its debts in cash and convert the remaining 98.25 percent into equity investment in the carmaker.
“We are not sure about Edison Motors’ funding capabilities and business plans,” the creditors said in the petition. “We want the court to maintain the current receivership so that SsangYong Motor can enhance its corporate value and find a new investor," they said.
Another rehabilitation creditor, Seoul Guarantee Insurance, has also requested the court to revise the rehabilitation plan. As a result, the rehabilitation plan is likely to be rejected in a meeting of related parties to be held on April 1. The court will approve the rehabilitation only when it is endorsed by three-quarters or more of the rehabilitation debt holders, two-thirds or more of the rehabilitation creditors, and one-half or more of the shareholders.
Commercial debts account for 380.2 billion won of SsangYong Motor's 547 billion won rehabilitation debts. If the commercial creditors vote against it, the rehabilitation plan will go down the drain.