Daewoo Shipbuilding & Marine Engineering filed a petition with the Changwon District Court on Thursday, seeking approval for its 2.9 trillion won ($2.5 billion) bailout plan.

If DSME’s mass debt-restructuring proposal is approved, the cash-strapped shipbuilding firm will receive 2.9 trillion won in liquidity from its major creditors, including the Korea Development Bank and the Export-Import Bank of Korea. Upon the court’s approval, there will be a weeklong window for bondholders to appeal.

If the approval is finalized, roughly half of the outstanding balance of fresh corporate bonds worth 1.35 trillion won will be invested in the company, while the balance will be deferred for three years.

DSME officials say the company is aiming to reduce labor costs by 25 percent -- from 840 billion won last year to 640 billion won this year -- by cutting employee wages and unpaid leave by the end of this year.

DSME’s self-rescue efforts come amid a worldwide shipping industry slump, largely attributed to falling freight rates triggered by an oversupply of vessels and shipbuilding equipment.

Less than a year ago, Hanjin Shipping -- once Korea’s largest and the world’s seventh-largest container shipping company -- found itself $5.37 billion in debt. It filed for bankruptcy in August.

By Julie Jackson (juliejackson@heraldcorp.com)