Korean Court Freezes Kia’s Assets
SEOUL, South Korea (AP) _ A Seoul court on Friday ordered all assets of troubled Kia Motors Corp. frozen, clearing the way for court receivership being sought by its creditors.
The Seoul Civil Court also issued the same order for Kia’s commercial vehicle arm, Asia Motors Corp. which also is in heavy debt.
The decision is expected to end a prolonged battle between the nation’s No. 2 car maker and its creditor banks. The banks has said they would provide bailout loans only when court receivership was accepted.
But Kia had demanded a special court protection that allows a firm to retain its current management while seeking to reschedule its debt. Court receivership means new management takes over.
In Friday’s ruling, the court froze all assets of the two financially troubled carmakers until it appoints new managers after consulting with creditors.
Hours after the ruling, Korea Development bank and other major creditors announced an initial 490 billion won (dlrs 516 million) bailout loan package for Kia.
But the court decision may anger thousands of Kia workers who have been on strike since last Wednesday protesting the creditors’ application for court receivership.
They feared that the banks would eventually sell their company to a third party that will lay off workers and curtail union activities. Samsung, the nation’s largest conglomerate, is reportedly interested in taking over Kia.
Kia, the nation’s eighth largest conglomerate, was declared near bankrupt in July with dlrs 10 billion in debt.
Last week, the government intervened and said it would support court receivership for Kia, assume majority ownership through a state-controlled bank and install a temporary new management team.