Mahindra & Mahindra's (M&M) South Korean arm, Ssangyong Motor Co (SYMC), filed for bankruptcy in a Seoul court on Monday, December 21, the Indian conglomerate said in a regulatory filing.
The SYMC has filed an application for commencement of rehabilitation procedure under the Debtor Rehabilitation and Bankruptcy Act of South Korea, M&M stated in its BSE filing.
The company informed the bourses last week that its loss-making South Korean subsidiary had missed repayments of loans aggregating to around 60 billion KRW (South Korean won), or Rs 408 crore.
The troubled car manufacturer has also applied for an autonomous restructuring support (ARS) programme, which is a court designed process, M&M added.
"If the Court approves the ARS, SYMC will continue to function under the supervision of its board and will negotiate with stakeholders to reach an understanding about a revival package which may include equity and debt financing and other related actions," M&M said.
However, some of its decisions will be subject to court approval, it noted. The Seoul Bankruptcy Court will deliberate and review the application and relevant documents submitted by SYMC to determine whether or not the court will commence the restructuring process of SYMC, the company said.
The Korean automaker has outstanding loans aggregating to 100 billion Korean Won (around Rs 680 crore).
In April this year, M&M board rejected a proposal to inject any fresh equity into SYMC.
The Mumbai-based auto major acquired the loss-making SsangYong in 2010 but failed to turn it around since then despite several attempts.
M&M holds nearly 75 per cent in the Korean company now and has since invested over $110 million. SsangYong has been struggling with deteriorating earnings since 2017 when it slipped into the red with a net loss of 66 billion wons as against a net profit of 58 billion wons in 2016.
In 2018, its net loss rose to 62 billion wons and then ballooned to 341 billion wons in 2019.