South Korea's SsangYong Motor Co Ltd filed for court receivership on Monday after it defaulted on loan repayment of about 60 billion won ($54.44 million), the South Korean automaker said in a statement.
"SsangYong Motor applied for the court receivership procedure as a massive disruption in the operation is expected after the company could not reach an agreement to extend its loan repayment deadlines with foreign banks," it said in a statement.
Indian automaker Mahindra & Mahindra, which holds a 74.65% stake in SsangYong, said last week the total payment was due on Dec. 14.
About 30 billion won was owed to Bank of America Corp, 20 billion won to JPMorgan Chase & Co and 10 billion won to BNP Paribas.
SsangYong is burdened with high debt and its vehicle sales between January-November period fell to 96,825, down more than 20% from a year earlier, the automaker's filing showed.
The automaker said it had applied for an autonomous restructuring support program, which gives SsangYong up to three months to negotiate with stakeholders including creditors to resolve issues, delaying the court's decision.
Mahindra since June has been looking for a buyer for all or most of its 75% stake in SsangYong, which it bought from near-insolvency in 2010 but has struggled to turnaround.
"Regardless of SsangYong's filing for court receivership, negotiations of SsangYong sale deal is still ongoing," South Korea's trade ministry said in a statement.
In June, an executive at Mahindra said that the Indian company was willing to let go of its ownership stake in SsangYong.
Mahindra & Mahindra shares fell 3.3% in their sharpest fall in eight weeks, while SsangYong closed down 19.2% versus a 0.2% rise on the broader KOSPI market.