GM Faces Fight Over Plan to Spin Off Korean R&D Center

General Motors Co. could face legal action over its plan to separate a research center in South Korea from its GM Korea operations.

Shareholders of the Korean unit will vote on Friday to approve the controversial move, which would spin off the facility as the GM Korean Technical Center Corp.

GM describes the maneuver as a step to strengthen the Korean affiliate’s future by securing global product development projects. But the company’s Korean union insists that dividing the affiliate is irrelevant to normalizing operations. It claims the spinoff would be a step toward ending vehicles production in Korea.

GM Korea threatened bankruptcy in April after posting 3 trillion won ($2.8 billion) in losses over the previous four years. The affiliate relented after reaching a new labor agreement and receiving financial aid from the state-owned Korea Development Bank.

The $7.2 billion recovery plan left GM with 77% ownership in the Korean affiliate. KDB, which holds a 17% stake in the business, failed to win a court injunction to block the spinoff, arguing that GM Korea failed to explain its motives.

The bank says it may exercise its right to veto the spinoff. The Korea Herald says KDB would probably be overruled by GM’s majority ownership.