SsangYong Motor Co. won’t likely easily graduate from court management despite completion of sale as creditors are unhappy with the debt restructuring and payment scheme.

According to industry sources on Wednesday, commerce creditors of SsangYong Motor have agreed to oppose to the carmaker’s restructuring scheme submitted to the court that requires endorsement from creditors for release from court protection.

Under the rehabilitation scheme, SsangYong proposed to repay 1.75 percent of the total debt worth 547 billion won ($554.5 million) in cash while converting the bulk of 98.25 percent into equity.

Creditors disagreed with the low redemption and plan to vote against the scheme on plenary session on March 1 after handing in written opposition representing 430 business creditors.

To graduate court receivership, SsangYong’s turnaround plan must earn approval from three-fourths of the securities right holders, two-thirds of the creditors, and half of the shareholders.

Among the liabilities worth 547 billion won, SsangYong owes 380.2 billion won to corporate creditors. Seoul Guarantee Insurance Company and Mahindra & Mahindra also lent funds to SsangYong but have no voting right, and thus commercial creditors have a combined voting right for 83.21 percent.

The new issues SsangYong offers to give to commercial creditors are worth 5,000 won apiece at face value. When combining the cash repayment and new issues, the actual reimbursement ratio reaches a mere 6.01 percent, which means creditors’ ownership then will stop at 4.85 percent versus 91.01 percent of the Edison Motors-led consortium that will soon take over the SUV maker.

The reimbursement ratio is comparably low, considering the ratio SsangYong offered under the first court management in 2009. It offered to pay back 47 percent with cash and 43 percent with new issues excluding the principal of 10 percent, but the plan also failed to receive approval from the then creditors.

The company was able to go under the wings of Mahindra & Mahindra after the court forced a go-ahead with the revised plan. The Indian parent paid out a total of 522.5 billion won, larger than the 304.9 billion won offer by the Edison Motors-led consortium, to own SsangYong Motor.

SsangYong Motor still owes its current and previous employees about 779.3 billion won for payment dues. The electric bus maker is planning to finance 430 billion won with rights offering and more with loans from financial institutions at home and abroad.

By Pulse

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