On Thursday, the General Motors Co’s president stated that the April 20 deadline can be a difficult deadline to meet, with plans to settle an agreement on a long term financial restructuring of the auto manufacturer’s auto unit based in South Korea, after which the operation would probably apply for bankruptcy protection.
GM president Dan Ammann stated in a Reuters interview that they prefer to take a road where they can expect a successful outcome. Further saying that it is the right thing to do for the stakeholders as a whole, expecting everybody to come to the table by Friday next week.
The South Korean government and the state funded Korea Development bank is building up pressure due to the April 20 deadline. According to the KDB on Wednesday, they at least need until the early days of May to meet due diligence on GM Korea as well as the auto manufacturer’s financial plan before pledging to public funds.
The deadline is a crucial date for the company because GM Korea must meet payments for its workers who acceded to leave the company as part of a severance plan which is voluntary.
The unit currently doesn’t have the necessary cash to make the payments. So far, GM stated that it will not provide any more cash until a deal with the unions as well as with the South Korean government is made.
Although GM Korea could continue to build cars if the automaker sought protection from South Korean bankruptcy courts, it is not yet known where the funds for the operations would come from.
Since the month of February, Korean government officials, GM executives and labor unions are conducting talks to come up with a restructuring and recapitalization of GM Korea.