Ssangyong Motor to Halt Production Again

Ssangyong Motor, currently awaiting a court's decision on bankruptcy protection, said Wednesday it will once again halt production at its lone plant by the end of the month amid a shortage of parts and a steep decline in sales, Yonhap News reported.

Production at Ssangyong's assembly plant in the city of Pyeongtaek, about 70 kilometers south of Seoul, will cease operations Thursday, said Chung Mu-young, a company spokesman. The stoppage is expected to last until Dec. 31.

At the same time, Ssangyong and its labor union agreed to cut January salaries by half due to a lack of cash reserves, Chung said.

"The agreement shows our commitment to making a turnaround," the spokesman said.

Ssangyong, of which China's Shanghai Automotive Industry Corp. owns a 51-percent stake, applied for court receivership on Jan. 9 amid a worsening liquidity crisis as the Chinese parent decided not to pump fresh capital into the ailing automaker.

After applying for receivership, Ssangyong halted production for four days as subcontractors stopped supplying parts. The automaker partially resumed production last week.

On Jan. 12, the Seoul Central District Court barred creditors from selling Ssangyong's assets, its first administrative step before making a decision on whether to accept Ssangyong's receivership early next month.

If the court approves Ssangyong's receivership, creditors and a court-appointed manager will then decide on the company's fate.

Under a court receivership, which is similar to bankruptcy protection in the United States, creditor banks will restructure a company by cutting workers and selling assets if the company is deemed viable. If not, creditors will liquidate the company.

Led by South Korea's state-run Korea Development Bank, creditors have called on SAIC to help rescue Ssangyong, but the Chinese company has shown little interest in bailing out its affiliate.