SsangYong was awarded bankruptcy protection from a Korean court on Monday after it failed to reach an agreement with creditors on loan repayments worth 60 billion won (approximately $54 million).
The court has granted the niche Korean automaker three months to complete a restructuring and potentially reach an agreement with creditors.
SsangYong like most automakers has been hurt by the slowdown caused by the ongoing Covid-19 coronavirus pandemic, though its sales were already slowing prior to the pandemic. It sold 132,799 vehicles in 2019, which was down from 141,995 the year prior.
"We very much regret this situation which is the result of the difficulties being experienced from the worldwide Covid-19 situation, and the concern caused to our partners and stakeholders, especially our employees, sales networks and financial institutions,” the automaker said in a statement.
Indian automaker Mahindra owns a 75% stake in SsangYong but has held back on further investment as it seeks to preserve cash in view of its own declining sales. Mahindra in April canceled a $406 million investment in SsangYong, and in June said it was looking for a buyer for the Korean automaker.