Kumho Tire, which has been suffering from the unprecedented provisional seizure of corporate bank accounts, has asked the court to suspend the seizure.
Kumho Tire recently asked the court to suspend the seizure of the receivables, which it requested to the non-regular workers' union on Aug. 14, due to its failure to accept the cancellation of the seizure.
As only the first trial's ruling has been made, the court will not be able to execute seizure of bank accounts until the final trial. If accepted, it will allow the company to normalize the financial situation through the deposit process.
The non-regular workers' union seized the corporate account on July 30 after filing an application with the court to seize and collect the receivables. The union is determined not to lift the "receivables seizure" unless Kumho Tire presents an immediate plan to regularize the employees.
Those who had worked in the form of subcontracts seized 20.4 billion won ($17.2 million), including the difference in wages and interest, based on the first trial's victory in the lawsuit to confirm the status of workers.
Kumho Tire has been unable to pay employees vacation fees and on-site allowances due to the seizure of corporate bank accounts, and its management of the funds has been partially disrupted.
In particular, due to the prolonged seizure, 670 suppliers to Kumho Tire across the country, including 260 in Gwangju, South Jeolla Province, have not been able to receive the payment for supplied goods and services.
The company recently asked the labor union to terminate the seizure, complaining of a serious management crisis, including a drop in external credibility and a lack of liquidity.
Meanwhile, Kumho Tire posted an operating loss of 35.4 billion won ($29.8 million) in the second quarter due to a sharp drop in demand for tires at home and abroad following the COVID-19 aftermath, turning into a deficit year-on-year. Its operating profit ratio was -7.6%.
Its sales amounted to 467.7 billion won, down 149.3 billion won (24.2 percent) from 617 billion won in the second quarter of last year.
If contractors close down immediately, it will affect the operation of production lines, and if it is prolonged, it will also suffer losses in the third and fourth quarters of this year.
