Ssangyong enters receivership

Ssangyong enters receivership

It may already be too late for beauty-challenged carmaker Ssangyong. Shanghai Automotive Industry Corp. (SAIC) appears to have given up on Ssangyong Motor Co, allowing the company to slip into receivership. SAIC holds a 51% stake in Ssangyong, but gave up management rights in a bid to avoid liquidation and allow Ssangyong some time to get back in the black. The Korean automaker’s Chief Executive Zhang Hai Tao and President Choi Hyung-tak both stepped down after the filing.

Untill recently SAIC said they would help prop up Ssangyong, but that apparently has changed. As vehicle sales have fallen a whopping 50%, cashflow has become too lean. With the global economic crisis, credit was needed to pay workers and new negotiations with the unions weren’t going anywhere fast. The receivership agreement protects Ssangyong from creditors and keeps it from entering bankruptcy, allowing it some time to try and survive. SAIC has said that it “will work with all parties so that Ssangyong can achieve a plan to normalise its operations.”

It may already be too late for beauty-challenged carmaker Ssangyong. Shanghai Automotive Industry Corp. (SAIC) appears to have given up on Ssangyong Motor Co, allowing the company to slip into receivership. SAIC holds a 51% stake in Ssangyong, but gave up management rights in a bid to avoid liquidation and allow Ssangyong some time to get back in the black. The Korean automaker’s Chief Executive Zhang Hai Tao and President Choi Hyung-tak both stepped down after the filing.

Untill recently SAIC said they would help prop up Ssangyong, but that apparently has changed. As vehicle sales have fallen a whopping 50%, cashflow has become too lean. With the global economic crisis, credit was needed to pay workers and new negotiations with the unions weren’t going anywhere fast. The receivership agreement protects Ssangyong from creditors and keeps it from entering bankruptcy, allowing it some time to try and survive. SAIC has said that it “will work with all parties so that Ssangyong can achieve a plan to normalise its operations.”

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