Daewoo Motor submits petition to court

Daewoo Motor submitted a written agreement reached by labor and management on self-rescue efforts and restructuring and a petition to the Inchon District Court Tuesday, asking creditors for fresh loans. Uhm Rak-Yong, governor of Korea Development Bank (KDB), the automaker¡¯s main creditor, made it clear that selling off the company would be better than turning it into a state-owned enterprise and said that it would speed up negotiations on the sale to General Motors (GM), which were stalled due to uncertainties over the company's future.

Consequently, Daewoo Motor is expected to get fresh loans through a consultative meeting of creditors tentatively scheduled for Nov. 29 or 30 and be put under court receivership this week. It will then resume operations and be sold to GM after further negotiations.

Daewoo Motor announced that it presented a labor-management agreement on restructuring and the en-masse resignation of office clerks to the Inchon court along with a petition signed by all of its executives and employees. In the petition, the company's executives and employees said that they feel deeply responsible for the company's mismanagement and promised to normalize the company through powerful self-restructuring.

The labor and management also decided to embark on an effort to arrange a restructuring plan aimed at renovating the management and normalizing plants and discussed forming a business renovation committee.

Lee Yun-Seung, an Inchon court judge in charge of the case, said that he planned to make a decision on whether to begin the court receivership process for Daewoo Motor as quickly as possible but a judgment is being delayed by procedural problems such as the appointment of a legal trustee and the review of data. He added that the court is likely to pass a final judgment on the matter within this week at the earliest.

As the trustee, creditors recommended Ryu Jong-Ryol, president of Korea BASF Company Ltd., Lee Jong-Dae, chairman of Daewoo Motor and Lee Young-Kook, president of Daewoo Motor. Of them, Chairman Lee Jong-Dae is reported to be the most likely candidate.

Meanwhile, an official of the KDB said that creditors will discuss supplying fresh loans to Daewoo Motor and exchanging commercial bills issued to subcontractors with new ones. Daewoo Motor has reportedly requested fresh loans worth about 650 billion won.

Ha Im-Sook artemes@donga.com