SEOUL -- General Motors' unprofitable South Korean unit and its labor union failed to reach a wage deal Friday, breaching a deadline set by the company to seek bankruptcy protection for the operation.
GM Korea held a board meeting late Friday to discuss filing for a court-led rehabilitation but it delayed a decision until Monday, said two sources familiar with the situation.
GM Korea officials were not immediately available for comment.
A union official told Reuters earlier in a text message that the two sides would continue talking until Monday afternoon.
The automaker shocked South Korea when it unveiled in February a major restructuring plan for the unit that included closing one of four plants in the country.
It has sought wage concessions from the union as well as government funding and incentives to save its remaining three factories.
GM had said the unit, which employs some 16,000 people, is likely to file for bankruptcy if there was no restructuring agreement by Friday.
"Without concessions from the labor union and clear resolution from stakeholders, the company has no choice but to go ahead with rehabilitation proceedings," GM Korea chief executive Kaher Kazem said after the talks failed in a letter to employees that was seen by Reuters.
GM Korea, however, is not expected to immediately file for court receivership, as any plan needs to be put to a vote at a shareholders' meeting. It will also need approval from 85 percent of its shareholders, who include the state-funded Korea Development Bank.
The bank told Reuters this week that it may sign a preliminary agreement by April 27 to financially support the business should an interim due-diligence report due on Friday turn out to be satisfactory.
The U.S. automaker owns 77 percent of GM Korea while KDB owns a 17 percent stake. GM's main Chinese partner, SAIC Motor Corp., controls the remaining 6.0 percent.
A KDB spokesman declined to comment.
A union official previously said the thorniest issue was job security for 680 workers at the Gunsan factory that is due to be closed by May.
"We don't want a disaster. We still have to keep in mind the worst situation," he said prior to the talks, declining to be identified due to the sensitive nature of the talks.
GM Korea's future is important for South Korea as the company and its suppliers employ some 156,000 workers. GM Korea also accounts for some 13 percent of the nation's automotive jobs and 16 percent of the sector's exports in Asia's fourth-biggest economy.
The restructuring also poses a challenge for South Korean President Moon Jae-in, who has attached the utmost priority to jobs, especially with local elections scheduled for June.
Over the past three years, GM has sought to focus on profitable markets, mainly the United States and China, and new technologies such as electric and automated vehicles.
Although the South Korean unit has been hobbled by labor costs and hurt by GM's decision to pull its Chevrolet brand from Europe, a key export market, any decision on whether to pull the plug on the unit will not come easy for GM CEO Mary Barra.
The unit was once the backbone of its Asian strategy and still makes more than 1 million assembled or partially assembled vehicles catering to the U.S., Europe and emerging markets.
It is also an engineering and design source for GM's small vehicles and electric vehicles as well as home to some of GM's top-ranked suppliers globally.