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South Korean automaker SsangYong Motor was put in court receivership on Thursday after parent company Mahindra & Mahindra failed to attract an investor by the court-mandated 31 March deadline.

Ssangyong, which mostly makes SUVs, filed for bankruptcy on 21 December 2020 after it failed to meet significant debt obligations with creditors refusing to reschedule repayment deadlines. The company was given a three-month respite from debt obligations by the Seoul Bankruptcy Court while M&M negotiated sale to a potential buyer.

Mahindra had held talks with US vehicle importer HAAH Automotive Holdings to sell all or most of its 75% stake in Ssangyong since last year but a letter of intent (LOI) to acquire the automaker failed to arrive before the deadline passed.

The court has now approved a debt rescheduling process for Ssangyong after it gained approval this week from the its largest creditor, Korea Development Bank. This is the second time in 10 years Ssangyong has been under court receivership.

Its future now depends on if a new investor can be found after Mahindra confirmed over a year ago it would not invest further funds in the company. Any rescue package would be subject to creditor approval.

Last week Ssangyong Motor CEO Yea Byung-tae stepped down from his post to allow the receivership process to take place.

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By GlobalData