Court requests signed agreement by Daewoo, labor union

The court has requested that Daewoo Motor submit an explanatory document Sunday stating its willingness to conform to restructuring. The court¡¯s move to force the company to request court receivership to document its willingness to cooperate with restructuring is unprecedented. The court's request may reflect its belief that the resuscitation of Daewoo depends largely on the efforts for restructuring agreed upon by the company and the labor union.

The Inchon District Court sent an official document requesting a signed affidavit by Nov. 28 stating that both parties would faithfully adhere to the conditions levied by the court and the court-appointed trustee and make all efforts and sacrifices for the resuscitation of the company. Although the request did not mention the documented agreement of the two parties, it in effect requested the submission of the agreement. The court revealed that once proceedings are underway, a restructuring phase would begin with efforts toward reducing overhead through layoffs and reductions to the post-recovery employee welfare fund.

The court, however, stated that the submission of such an agreement does not necessarily mean that the court receivership process will soon be implemented. The document is one of many components that are required to make the decision but carries greater weight as the agreement by the company and the labor union was considered important for the chances of Daewoo¡¯s resuscitation.

However, the negotiations between the management and labor have failed to narrow the gap concerning the layoffs of Daewoo workers. The spokesperson for the labor union, Choi Jong-Hak, stated that the labor union could not agree to a restructuring plan with worker layoffs at the forefront and called for negotiations with the government and the creditors to discuss restructuring and the vision for the company. In response, Daewoo president Lee Young-Kook stated that restructuring without layoffs would be next to impossible and that the company has not changed its stance on the last proposal submitted by labor Nov. 24.

Kim Seung-Jin sarafina@donga.com