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South Korea's Ssangyon Motor Co. said Friday that a court ruling on a turnaround plan submitted by the company, which has been under bankruptcy protection since February, is to come later in the day.
Ssangyong, a former affiliate of China's Shanghai Automotive Industry Corp. (SAIC), turned in the plan to the Seoul Central District Court on Sept. 15, which was scheduled to be brought up in Wednesday's meeting between the court and Ssangyong's creditors.
The turnaround plan calls for writing off about 80 percent of shares owned by its former parent SAIC, which will reduce its stake from 51 percent to 11.2 percent, and converting 393 billion won (334.7 million U.S. dollars) in debts into new shares.
According to Chung Mu-young, a spokesman at Ssangyong, the court approval depends on whether foreign creditors agree to the rehabilitation plan.
The spokesman added that a delay in the court decision is possible if there is a disagreement among the foreign creditors.
Unless the court accepts the plan, Ssangyong's liquidation seems unavoidable, local media said. Ssangyong, South Korea's smallest carmaker, entered bankruptcy protection in February after SAIC decided to withdraw from the company due to its losses.
The company went through a massive layoff as part of a restructuring plan order by a local court, shedding 2,646 workers, or 36 percent of its workforce.
While undergoing the layoff, Ssangyong's operations have been suspended as unionized workers protesting the job-cuts occupied the automaker's only plant in Pyeongtaek, located south of Seoul, for 77 days.
Hit by the strike, which supposedly cost the company 316 billion won (269.1 million U.S. dollars) in lost production, Ssangyong's net loss expanded to 177.1 billion won (150.9 million U.S. dollars) during the second quarter of 2009.
Shares of Ssangyong Motor were selling at 3,095 won as of local time 9:21 a.m. (0021 GMT) in Seoul, jumping 10.93 percent, on speculation that the court may accept the company's turnaround plan.