SEOUL - A COURT on Monday froze the debts of ailing South Korean automaker Ssangyong Motor, which last week filed for protection from creditors to avoid bankruptcy.
The Seoul Central District Court said it has frozen the Chinese-owned firm's debts and obligations and banned asset sales, and would decide within one month whether to accept its request for court receivership.
For months South Korea's smallest automaker had been pleading with its parent, China's Shanghai Automotive Industry Corp (SAIC), for a cash injection to help it cope with dwindling sales.
Unions said on Monday they are suspending strike plans and are willing to discuss a turnaround plan.
Union leaders said 71 per cent of their 5,161 members at Ssangyong Motor, in a vote last week, approved a strike against any plans to cut jobs.
'Union leaders have been authorised to call a strike but there will be no labour action for a while as our company is in a critical stage,' union spokesman Lee Chang-Kun told AFP.
'We still oppose lay-offs but we are ready to discuss other measures to normalise operations,' he said.
The company's directors have called for restructuring, including redundancies and wage cuts.
SAIC applied last week for court protection from creditors after it failed to secure new loans from South Korean banks.
The union said it would file a lawsuit against SAIC to seek compensation, accusing the Chinese parent of stealing technology and failing to honour its investment pledge.
Seoul has said it cannot directly support the automaker since this would breach World Trade Organisation rules. But the Ministry of Knowledge Economy said it had held talks with financial regulators on ways to support Ssangyong's subcontractors.
Financial Services Commission (FSC) vice president Rhee Chang-Yong told a radio programme the watchdog is considering whether to inject liquidity into the subcontractors.
Shanghai Automotive acquired Ssangyong in 2004. Ssangyong's outstanding bank loans are estimated at 300 billion won (S$37 million).
Ssangyong has fallen into financial crisis amid slow auto sales and a dearth of operating funds from its parent firm. The company expects to post a net loss of more than 100 billion won (US$76 million) for last year. -- AFP
