SEOUL (Reuters) – General Motors’ South Korean unit and its labor union failed to reach a wage deal by Friday, breaching a deadline set by the U.S. automaker to seek bankruptcy protection for the loss-making unit.
A source familiar with the matter said GM Korea will hold a board meeting at around 8 p.m. local time on Friday to discuss filing for a court-led rehabilitation.
Union - Official - Reuters - Message - Sides
But a union official told Reuters in a text message that the two sides will continue talking until Monday afternoon.
The U.S. automaker shocked South Korea when it unveiled in February a major restructuring plan for its unit that involved closure of one of its four plants in the country and voluntary redundancies of 2,600 workers.
Wage - Concessions - Union - Government - Funding
It has sought wage concessions from the union as well as government funding and incentives to save the remaining three factories.
GM has said the unit, which employs some 16,000 people, is likely to file for bankruptcy if there was no restructuring agreement by Friday.
Concessions - Labor - Union - Resolution - Stakeholders
“Without concessions from the labor union and clear resolution from stakeholders, the company has no choice but to go ahead with rehabilitation proceedings,” GM Korea CEO Kaher Kazem said after the talks failed in a letter to employees that was seen by Reuters.
GM Korea, however, is not expected to immediately file for court receivership, as any plan needs to be put to a vote at a shareholder’s meeting. It will also need approval from 85 percent of its shareholders.
Korea - Development - Bank - KDB - Bank
That includes the state-funded Korea Development Bank (KDB). The bank told Reuters this week that it may sign a preliminary agreement by April 27 to financially support the business should an interim due-diligence report due on Friday turn out to be satisfactory.
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