Troubled Ssangyong has halted production at both its plants because of a shortage of parts. It is unclear when production may resume.

The SAIC-owned company is experiencing a liquidity crisis and has already applied for bankruptcy in Korea.

Some suppliers have reportedly stopped providing parts on concerns over payment.

There is growing concern in Korea – mirroring those heard recently in the US – that the failure of Ssangyong could also have big knock-on effects in Korea’s automotive supplier industry.

Some analysts speculate that SAIC, which now owns 51% of Ssangyong, would be prepared to let the South Korean firm fail, given global overcapacity and slowing sales.

On Monday, the Seoul Central District Court barred Ssangyong from selling assets and its creditors from seizing or auctioning its assets to meet its debts.

However, the Yonhap news agency reports that the government is considering measures to help local parts suppliers overcome the fallout from Ssangyong’s application for court receivership, a government official said Tuesday.

Lee Dong-geun, head of the Knowledge Economy Ministry’s growth industry office, told reporters that Seoul is looking at the feasibility of using the so-called fast track support plan to help cash strapped companies.

The plan is designed to prevent healthy small and medium-size enterprises (SMEs) from going bankrupt due to the downturn in overall economic conditions not directly related to their own operations.

“Nothing has been decided about offering support, but there are governmental talks underway,” the official said.