GM Korea preparing to file for court receivership, 300,000 jobs in jeopardy
- 6 years ago
GM Korea is preparing to file for court receivership later this month due to its ongoing cash flow issues.
The move could put hundreds of thousands of local jobs in jeopardy.
Lee Seung-jae reports.
The automaker's cash crunch has seen Barry Engles, President of GM International, make six visits to Korea this year alone, which included seven negotiation sessions between GM Korea management and the carmaker's labor union.
More than a dozen meetings were also held with officials from Korea's political and financial circles in an increasingly desperate bid to resolve the crisis.
However, the outcome so far has been the same.
With the hardships facing GM Korea showing no signs of easing,... the automaker is now on the verge of filing of bankruptcy.
After failing to come to an agreement during their eighth negotiation last week,... GM President Dan Ammann hinted that its Korean unit will file for bankruptcy,... reiterating that the April 20th deadline for the company and its labor union to come to an agreement will not be delayed.
According to a person familiar with the matter,... GM Korea is expected apply for bankruptcy protection around that date.
It has warned the labor union that, if it doesn't accept drastic restructuring measures,... the carmaker is likely to gradually shut its production facilities,... leaving only design, R&D, sales and services operations in Korea.
In the worst case scenario,... bankruptcy would mean 300-thousand job losses.
This would also mean GM Korea would need about 465-million U.S. dollars by the end of April to cover severance payments and other expenses,... as some 25-hundred employees recently applied for voluntary retirement,... in exchange for severance pay and hefty cash payments.
According to an expert, while massive layoffs are imminent,... as the court will order restructuring first,... it remains to be seen whether GM Korea can be salvaged or there's no other option than liquidation.
Lee Seung-jae, Arirang News.
The move could put hundreds of thousands of local jobs in jeopardy.
Lee Seung-jae reports.
The automaker's cash crunch has seen Barry Engles, President of GM International, make six visits to Korea this year alone, which included seven negotiation sessions between GM Korea management and the carmaker's labor union.
More than a dozen meetings were also held with officials from Korea's political and financial circles in an increasingly desperate bid to resolve the crisis.
However, the outcome so far has been the same.
With the hardships facing GM Korea showing no signs of easing,... the automaker is now on the verge of filing of bankruptcy.
After failing to come to an agreement during their eighth negotiation last week,... GM President Dan Ammann hinted that its Korean unit will file for bankruptcy,... reiterating that the April 20th deadline for the company and its labor union to come to an agreement will not be delayed.
According to a person familiar with the matter,... GM Korea is expected apply for bankruptcy protection around that date.
It has warned the labor union that, if it doesn't accept drastic restructuring measures,... the carmaker is likely to gradually shut its production facilities,... leaving only design, R&D, sales and services operations in Korea.
In the worst case scenario,... bankruptcy would mean 300-thousand job losses.
This would also mean GM Korea would need about 465-million U.S. dollars by the end of April to cover severance payments and other expenses,... as some 25-hundred employees recently applied for voluntary retirement,... in exchange for severance pay and hefty cash payments.
According to an expert, while massive layoffs are imminent,... as the court will order restructuring first,... it remains to be seen whether GM Korea can be salvaged or there's no other option than liquidation.
Lee Seung-jae, Arirang News.