roubled South Korean automaker Ssangyong Motor Co. has applied for protection from creditors to buy time to restructure itself into a profitable manufacturer.
Ssangyong said in a statement Friday that it made the "unavoidable choice" to file for court receivership to "deal with an urgent liquidity crisis and transform itself into a company with sustainable growth."
South Korea's fifth-largest carmaker said the decision came at a meeting of its board of directors in China on Thursday where its parent company Shanghai Automotive Industry Corp. is based.
Ssangyong, South Korea's fifth-largest automaker, is far smaller than domestic rivals Hyundai Motor Co. and Kia Motors Corp. Its fate, however, has been closely watched amid turmoil in the world auto industry, which has been rocked by plunging demand for vehicles as a result of the global financial crisis.
The process of court receivership in South Korea is meant for companies that have gone bankrupt or are on the verge of doing so and if approved freezes their debts.
SAIC took over Ssangyong in 2004 and owns 51.33 percent in the company.
Ssangyong said in its statement that the board has come up with a number of measures to cut costs such as seeking voluntary retirement, wage cuts for the next two years and provisional suspension of welfare support, among others.
"The board expects such measures to improve the financial structure of the company," the statement said.
Ssangyong, which has annual production capacity of 200,000 vehicles and 7,100 employees, posted a net loss of 98.1 billion won ($74.1 million) in the first nine months of last year amid weakening domestic demand for SUVs — the company's mainstay vehicles. Ssangyong also produces the Chairman luxury sedan.
The decision comes as the South Korean company's labor union, which is opposed to restructuring efforts, voted earlier this week on a strike motion and was awaiting the outcome of the board meeting before deciding whether to count the ballots.
Union officials could not immediately be reached for comment.
Recent news reports have said Ssangyong plans to slash more than 3,000 jobs, including half of some 5,200 assembly line workers.
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Associated Press writers Jae-soon Chang and ShinWoo Kang contributed to this report.