A court overseeing bankruptcy protection for South Korean automaker Ssangyong Motor, approved the company’s rehabilitation plan on Thursday, clearing a key hurdle in the debt—ridden SUV manufacturer’s path toward revival.
Ssangyong Motor went into court—approved bankruptcy protection in February amid falling sales and mounting red ink. Fears of its liquidation had spiked last summer as hundreds of workers seized its main assembly line for more than two months to oppose mass layoffs.
Ssangyong is majority—owned by Shanghai Automotive Industry Corp., or SAIC, one of China’s largest vehicle manufacturers, though it lost management control amid the bankruptcy protection process.
The company mostly manufactures light SUVs, but also makes a luxury sedan, the Chairman.
In September, the automaker submitted a corporate rehabilitation plan to the court that centres on how to repay its debt worth about 1.2 trillion won ($1 billion).
Some creditors, however, have so far rejected the plan over Ssangyong’s proposed debt repayment terms.
But the Seoul Central District Court overruled the objections in giving approval on Thursday, saying the plan has met all legal requirements and is believed to be able to protect creditor rights.
Ssangyong hailed the decision as “laying the groundwork for normalizing” operations.
The company said in a statement that it will “make utmost efforts to be reborn as a corporation with long—term survival capabilities by making sure to push ahead with the revival plan.”
Ssangyong is far smaller than domestic rivals Hyundai Motor and Kia Motors Corp. Its troubles have drawn attention, however, as they came amid turmoil in the world auto industry amid the global economic slowdown.