As widely expected, Daewoo Motor America has filed for bankruptcy protection after being excluded from a GM takeover deal announced recently.
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A group of South Korean banks and government agencies will fund the company through the summer so it can continue to import parts to service about 160,000 Daewoo cars owned in the United States, Associated Press (AP) said.
GM will control Daewoo’s fate after that, AP said.
GM is expected to sell Daewoos under their own badge in Mexico but there has been speculation the cars will be re-launched in the US as entry-level Chevrolet models.
AP said 50 of Daewoo’s last 60 staff will remain at the headquarters in Compton, south of Los Angeles in California, for at least the next two months. Staff once peaked at 350.
With no new vehicles arriving in the United States, Daewoo dealerships will likely be forced out of business in the coming weeks, AP said.
AP said that GM has denied legal responsibility to United States Daewoo dealers. But 300 of the 525 outlets plan to sue GM for damages, charging that the US giant is putting them out of business by planning to sell Daewoo vehicles through GM dealerships, the news agency added.
AP said Daewoo would honour all warranties until July when the deal with GM is completed and a trust fund is set up to cover warranty work.
