Daewoo Motor Restructuring Daewoo Motor in Korea has decided to proceed with entering into Reorganisation under court receivership. While some media coverage has referred to this as bankruptcy, the process in Korea differs from that of the meaning generally known. In reality, this is an extremely positive step that serves to re-establish Daewoo Motor as a strong and healthy company and to expedite the transition of ownership currently in process.

“bankruptcy…is an extremely positive step that serves to re-establish Daewoo Motor as a strong and healthy company “

Entering into court receivership was, in fact, a strategic step which was taken intentionally and with positive intent by Daewoo Motor in conjunction with creditors and the Korean government. Several years ago Kia Motor Co. and Samsung Motor Inc. in Korea took similar steps to overcome such difficult situations, resulting in a very favourable outcome for both companies. Daewoo’s current overall organisational picture is, in fact, considerably more favourable than those cases of Kia Motor Co. or Samsung Motor Inc.

Specifically, Daewoo Motor Co. is in the process of restructuring and realigning the organisation to result in reduced overhead expenses and a near-term return to profitability worldwide. This “self-rescue” plan involves significant adjustments to corporate staffing in Korea, involving layoffs, salary reductions, and other difficult sacrifices. Unfortunately, a serious obstacle to that restructuring has been related to the labour union representing the assembly line workers, and its unyielding refusal to concur with a necessary staffing reduction. Lacking any other viable alternative, Daewoo Motor entered into court receivership as a strategic move to overcome this union’s unreasonable resistance to staffing reductions. Daewoo Motor is now solidly positioned to proceed with concluding the transition of the company to a new owner on an accelerated basis. Discussions with General Motors are ongoing.

Reorganisation under court receivership in Korea is a much less imposing process than bankruptcy elsewhere in the world. With the special involvement and support of the Korean government, parts and component suppliers will be paid in full under court receivership. This assures full protection for the suppliers of parts and materials to Daewoo Motor, and assures the continued flow of materials to sustain scheduled vehicle production. Additionally, under Korean law, union activity is very limited under a scenario of court receivership, assuring that there will be no union-imposed interference in the continuation of vehicle production. As well as assuring our capacity to continued vehicle production during this transitional period, this likewise serves as assurance of a continuing flow of vehicle spare parts to domestic and worldwide markets.

Young-Kook Lee


Daewoo Motor Co., Ltd.