Seoul  - Cash-strapped South Korean automaker Ssangyong Motor applied for receivership in a Seoul court to avoid bankruptcy Friday, following a decision by its Chinese owner.

The decision to file for receivership was made at a meeting Thursday night by parent company Shanghai Automotive Industry to tackle Ssangyong's liquidity crisis, after the company was denied new bank loans two weeks ago, the sport utility vehicle (SUV) manufacturer said in a statement

"The board of directors decided to apply for a court receivership in order to cope with the current liquidity crisis and turn the company into an entity capable of a continuous growth," Ssangyong said.

Ssangyong, the smallest of South Korea's five carmakers, said it received 45 million dollars from Shanghai Automotive, which holds 51 per cent of the company, in December. Its main creditor, the state-owned Korea Development Bank, ruled out further loans unless there was additional funding.

The carmaker as been hit hard by the global economic downturn. Sales in 2008 collapsed to 92,665 units, down 29.9 per cent. (dpa)