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Daewoo US arm files for bankruptcy protection
Daewoo Motor America has filed for bankruptcy protection in the aftermath of the bankruptcy of it South Korean parent last year.
Daewoo Motor America has filed for bankruptcy protection in the aftermath of the bankruptcy of it South Korean parent last year.
The company said on Friday that a group of South Korean banks and government agencies will fund it through the summer so it can keep importing parts to service about 160,000 Daewoo automobiles owned in the United States.
After that the fate of Daewoo in the United States will be in the hands of General Motors.
The giant US automaker said last month it would pay $251 million for a stake in a new company that includes the assets of the Daewoo Motor, which went bankrupt last year.
The agreement will boost GM's presence in Asia and allow the automaker to sell Daewoo vehicles under a GM brand in Mexico.
At Daewoo Motor America's headquarters in Compton, about 50 of the company's remaining 60 employees will remain on staff for at least the next two months, Mike Mahoney, sales operations manager for Daewoo Motor America. The office once housed as many as 300.
With no new vehicles arriving in the United States, Daewoo dealerships will likely be forced out of business in the coming weeks, Mahoney said.
GM has said that it has no legal responsibility to Daewoo dealers in the United States. However, about 300 of Daewoo's 525 US dealers are planning to sue GM for damages, charging that GM is forcing them out of business with plans to sell Daewoo vehicles through GM dealerships.
Daewoo will honor all warranties until July, when the deal with GM is completed and a trust fund is set up to cover warranty work. Bureau Report
The company said on Friday that a group of South Korean banks and government agencies will fund it through the summer so it can keep importing parts to service about 160,000 Daewoo automobiles owned in the United States.
After that the fate of Daewoo in the United States will be in the hands of General Motors.
The giant US automaker said last month it would pay $251 million for a stake in a new company that includes the assets of the Daewoo Motor, which went bankrupt last year.
The agreement will boost GM's presence in Asia and allow the automaker to sell Daewoo vehicles under a GM brand in Mexico.
At Daewoo Motor America's headquarters in Compton, about 50 of the company's remaining 60 employees will remain on staff for at least the next two months, Mike Mahoney, sales operations manager for Daewoo Motor America. The office once housed as many as 300.
With no new vehicles arriving in the United States, Daewoo dealerships will likely be forced out of business in the coming weeks, Mahoney said.
GM has said that it has no legal responsibility to Daewoo dealers in the United States. However, about 300 of Daewoo's 525 US dealers are planning to sue GM for damages, charging that GM is forcing them out of business with plans to sell Daewoo vehicles through GM dealerships.
Daewoo will honor all warranties until July, when the deal with GM is completed and a trust fund is set up to cover warranty work. Bureau Report