Last December 2020, Ssangyong filed for bankruptcy. Then in January 2021, the automaker had to pay loans amounting to KRW 301 billion (about PHP 13.3 billion). They also have to look for a new investor as the parent company Mahindra will soon pull out their stake in Ssangyong. Soon after, the company's top executives have resigned as well.
To make matters worse, Ssangyong will have to find a new CEO soon. That's because Byung Tae Yea, the brand's current CEO, is resigning. In his resignation letter, Yea said that he is taking responsibility for failing to find a strategic investor as the company struggles financially.
“As securing new investment is taking longer than expected, and as the restructuring process is imminent, more complications and struggles are expected to lie ahead. Coming up with resolutions together with you could be an option, but as I deeply feel the shock and letdown you would have felt, I think it is right to take responsibility as the president who took care of management so far,” said Yea.
Back in March 2021, the Korean automaker was supposed to receive financial aid from the American company HAAH Automotive Holdings. They were prepared to give Ssangyong KRW 300 billion in financial aid, provided that the Korean Development Bank (KDB) offered financial support as well. But the KDB wants assurance from HAAH and Ssangyong that they will have a revival plan in play before providing additional funds.
Ultimately, however, KDB and HAAH Automotive Holdings failed to agree on terms, with the latter not deciding to send a letter of intent to help Ssangyong Motors. With it, the automaker is now at risk of delisting and liquidation.
But it looks like Ssangyong will be able to escape from capital erosion based on a report by Motorgraph. With help from the Korean Financial Supervisory Service, Ssangyong Motors announced that it has increased its assets after conducting an asset reevaluation. From the current KRW 402.6 billion (about PHP 17.5 billion), the company was able to increase it to KRW 681.4 billion (about PHP 29.6 billion).
With this in mind, Ssangyong could be able to repay its massive loans and avoid being delisted and liquidated. However, that won't be easy as the company needs to fix its last year's annual report. Samjung Accounting, Ssangyong's accounting firm, rejected the company's audit opinion, saying that “significant questions arise about its ability to survive as a continuing company”.
According to Article 48 of the listing regulations on the South Korean stock market, if the auditor's opinion on financial statements of the recent business year is inappropriate or rejected, the stock exchange will delist the said company. In order for Ssangyong to avoid being removed from the Korean stock exchange, they have to correct the annual report. The company will also have to go through a procedure to receive an audit opinion from an accounting firm.
Ssangyong may be at the cliff's edge, but if they really have enough assets to pay their outstanding loans, they may be able to avoid being dissolved, appoint a new CEO, and even find themselves a new investor.