Ssangyong Motor to halt production again

Ssangyong Motor to halt production again
SEOUL, Jan. 21 (Yonhap) -- Ssangyong Motor Co., currently awaiting a court's
decision on bankruptcy protection, said Wednesday it will once again halt
production at its lone plant by the end of the month amid a shortage of parts and
a steep decline in sales.

Production at Ssangyong's assembly plant in the city of Pyeongtaek, about 70
kilometers south of Seoul, will cease operations on Thursday, said Chung
Mu-young, a company spokesman. The stoppage is expected to last until Dec. 31.
At the same time, Ssangyong and its labor union agreed to cut January salaries by
half due to a lack of cash reserves, Chung said.
"The agreement shows our commitment to making a turnaround," the spokesman said.
Ssangyong, of which China's Shanghai Automotive Industry Corp. owns a 51-percent
stake, applied for court receivership on Jan. 9 amid a worsening liquidity crisis
as the Chinese parent decided against pumping fresh capital into the ailing
automaker.
After applying for receivership, Ssangyong halted production for four days as
subcontractors stopped supplying parts. The automaker partially resumed production
last week.
On Jan. 12, the Seoul Central District Court barred creditors from selling
Ssangyong's assets, its first administrative step before making a decision on
whether to accept Ssangyong's receivership early next month.
If the court grants approves Ssangyong's receivership, creditors and a
court-appointed manager will then decide on the company's fate.
Under a court receivership, which is similar to bankruptcy protection in the
United States, creditor banks will restructure a company by cutting workers and
selling assets if the company is deemed viable. If not, creditors will liquidate
the company.
Led by South Korea's state-run Korea Development Bank, creditors have called on
SAIC to help rescue Ssangyong, but the Chinese company has shown little interest
in bailing out its affiliate.
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