Ssangyong, 75 percent owned by Indian automaker Mahindra defaulted on a loan payment worth about 60 billion won (around USD 54.4 million). Before that, the company has been seeking to extend the maturity date with its lenders but has been unable to reach an agreement.

While the Korean government launched unprecedented financial stimulus measures to help soften the blow from coronavirus pandemic, including direct support for struggling industrial groups, analysts believe South Korea’s government will not extend the same support to companies backed by overseas investors.

South Korea’s commerce ministry has, however, said it plans to provide some financial support for Ssangyong’s local parts suppliers.

Mahindra, one of India’s largest automobile manufacturers, bought Ssangyong, which specialized in making sport utility vehicles, on the verge of insolvency a decade ago. But has been unable to turn it round and has been looking for a buyer for its controlling stake in the South Korean carmaker since June.

Under court receivership, Ssangyong will have three months to strike a deal with a potential buyer or negotiate a restructuring plan with creditors.

An official from Ssangyong said: “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. We are making every effort to transform the situation, and to build a more robust and competitive company for the future.”

South Korea’s trade ministry said negotiations on a sale of Ssangyong were “still ongoing” despite the group filing for court receivership. HAAH Automotive Holdings, a California-based company that imports vehicles for the US market, has expressed interest in investing in Ssangyong, according to Korean media.