Ssangyong suppliers face massive bankruptcies
About 1,000 parts-suppliers for Korea’s fifth largest auto maker; Ssangyong are now facing massive bankruptcies as the Ministry of Knowledge Economy, which utilized the services of the Financial Services Commission decided not to offer financial aid to the suppliers, leaving these companies to seek help from their respective creditors.
The government is concerned that by offering financial assistance to Ssangyong’s suppliers, it could be seen as providing special favors which in return can cause protests from other struggling businesses in the country.
Ssangyong which had difficulties keeping up with payments to its suppliers is currently under bankruptcy protection via a court receivership. It was revealed that by next month, the courts will decide whether to place the auto maker under a debt workout program or simply liquidate it.
Ssangyong has however issued bills that mature within two to six months to its suppliers which has proved to be useless to the suppliers since the claim cannot be processed at the moment due to the court receivership. Recently, the Korean auto maker announced that it will resume production at its Pyeongtaek and Changwon factories in Korea on Monday.
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