Ssangyong Engineering & Construction, the nation’s 13th-largest builder, filed for a debt workout program on Tuesday in an effort to overcome its liquidity crunch.

Under the program, a company requests its creditor banks for a payment deferment or partial debt relief, in exchange for amending its financial and employment structure.

The company’s credit rating was thus downgraded from B- to CCC, according to the Korea Investors Service Inc., Korea Ratings Corp. and NICE Information Service.

Hit by the extended slump of the local construction market and its years-long failure to find a new owner, Ssangyong E&C had recently been cornered into a financial dead end.

The company’s net loss amounted to some 400 billion won last year ($368 million) , which constituted an erosion of its 149 billion won capital.

The builder also faces an ongoing feud between its creditors and former shareholder, the state-run Korea Asset Management Corp.

KAMCO, before handing over its shareholdings to the Korea Deposit Insurance Corp. and other creditors, demanded that chairman Kim Suk-joon step down and take responsibility for the financial fallout.

Ssangyong E&C and the creditor banks, however, berated the asset manager for neglecting its public duty as a state-run shareholder and refusing to consent to a debt-for-equity swap.

By Bae Hyun-jung (tellme@heraldcorp.com)