GM Korea is on the verge of filing for bankruptcy if it doesn’t provide a turnaround and restructuring plan to parent General Motors (GM) and the Korea Development Bank by April 20. The two entities are GM Korea’s biggest financial lifelines.

According to WardsAuto, a new agreement on wages and bonuses for Korea Metal Workers Union (KMWU) members is the key to the turnaround plan. However, on April 12, a key negotiating session between GM Korea and the KMWU was canceled when KMWU officials refused to conduct the meeting under CCTV monitoring. Since then, no new talks have been scheduled.

Meanwhile, Korea Development Bank chairman, Lee Dong-gull said a due diligence to determine whether it is feasible to provide GM Korea with interim and new financing will be completed by the end of April. Lee holds a 17% stake in GM Korea.

Korea’s minister of trade, industry and energy, Paik Un-gyu, said his agency is expediting a review of GM Korea’s application to have some of its factories designated as foreign investment zones. This will provide the company a five-year tax-free status for new investments, followed by additional 50% tax reductions in subsequent years.

Clockwise, from top left, Chevrolet Aveo sedan, Malibu, Orlando and Aveo hatchback.

The company wants to have Bupyeong, where its main plants, R&D facilities and headquarters are located, and Changwon, where its Spark assembly and drivetrain plants are located, designated as foreign investment zones. However, Paik said no final decision will be made until GM Korea and the union concessions complete their 2018 wage negotiations.

Last month, GM said union concessions as well as government support were needed for it to remain operating in the country. Reuters, on the other hand, quoted South Korea’s finance minister Kim Dong-yeon as saying that public funds could only be used to support the company if it was clear that the business could survive on its own long-term.

“Major shareholders and other parties involved need to swiftly come to an agreement on sharing the burden of improving the loss-making operation,” read the report. GM is currently seeking government funding and incentives on top of wage concessions to save its Korean subsidiary, which just posted an annual net loss of US$1.1 billion (RM4.28 billion), its fourth straight year in the red.