Daewoo Motors Declaring Bankrupt

It had been a long ailment for Daewoo Motor Corporations, which at least officially declared the bankruptcy and its unfeeling labor union also rejected the restructuring plan, which calls for the layoffs, the creditors informed. As informed to the press by Yang Mun-suk, the official spokesperson for Korea Development Bank, which is Daewoo’s major creditor, “The union had refused to submit their consent for any restructuring plan. We cannot wait for longer. Now, Daewoo’s bankruptcy has become formal.”

Photo 1: DAEWOO

The creditors later informed that the next step would probably be to put the company into the court receivership, which is the process of deploying a new management and freezing all the debts. Then, once leading, auto firm was officially declared bankrupt after defaulting on about $78 million in the commercial papers for two days straight. After the day long talks with the management failed, the union then called for a last-minute meeting also to discuss the future plan of action. However, that meeting ended up without a consent for resurrection plan, which would have been preventing the bankruptcy.

However, the court receivership may put the creditors at lose as they try to sell of this troubled organization to General Motors Corp. GM had been doing the negotiations to purchase this South Korean carmaker since a year. Creditors were also concerned about that fact that selling Daewoo to General Motors could be delayed as this American firm would be quoting a lower price.

Photo 2: Daewoo Motors Declaring Bankrupt

Daewoo was the former symbol of Korea’s economic growth, which had been put under a debt-workout plan since year 1999. However, lately the creditors stopped funding Daewoo and demanded the unions to accept the layoff. As per Daewoo executives, the company was not able to survive for a single day without the without being funded by the creditors. Even if highly indebted, Daewoo can set open an easy way for the foreign automakers to crack open the South Korea’s car market and act as a stepping stone to get into the nearby China.