South Korean manufacturer Ssangyong has filed for bankruptcy in its home country after defaulting on a loan repayment of 60 billion won (£40 million) – but the firm's UK operations are unaffected by the move.
The SUV specialist has applied for court receivership, which include rehabilitation and restructuring procedures, due to what a spokesperson termed "difficulties being experienced from the worldwide COVID-19 situation".
Indian automotive giant Mahindra & Mahindra holds a 74.65% stake in Ssangyong, and said the loan was due to be repaid on 14 December. Ssangyong said it delayed the loan due to "worsening business conditions", and applied for the rehabilitation procedures to stop interruptions to its business operations.
The firm has applied for an autonomous restructuring support programme, which would give it three months to reach an agreement with stakeholders and creditors to resolve any issues.
The statement from Ssangyong added: "We are making every effort to transform the situation, and to build a more robust and competitive company for the future."
Kevin Griffin, the boss of Ssangyong Motors UK, said the bankruptcy filings would not affect its operations. "Whilst this situation is not ideal, I strongly believe that the Autonomous Restructuring Programme will result in the birth of a stronger company," said Griffin. "I want to reiterate that our UK operations are totally unaffected, and we are very much open for business."
Mahindra bought its stake in Ssangyong in 2010, helping to resuce the firm from near-bankruptcy. But the firm's global sales remain small, and in April Mahindra said it would not make any more investments in the company. In June, Reuters reported that Mahindra was looking to sell its stake in Ssangyong.
Founded in 1954, Ssangyong is Korea's fourth largest car manufacturer. It expanded to the UK in 1994 but has remained a niche player, with just a 0.09% market share last year.