The move meant the scrapping of a keenly awaited deal under which the fledgling auto maker would have been transferred to Daewoo in return for the handover of Daewoo Electronics Co to Samsung.

It ended nine months of speculation over the fate of the state-propelled swap and allowed the administration a face-saving exit from a deal which analysts had said was unworkable from the start.

"The Samsung Group has decided to take a decisive measure to settle the issue of Samsung Motors, under which Samsung Motors will file for a court receivership," the group said in a statement.

Samsung Motors, which only began production 15 months ago at the height of South Korea's economic crisis, has been groaning under the weight of mounting debts after its disastrous start.

Head of the Samsung Group, LeeKun-Hee, said he would use 2.8 trillion won ($2.4 billion) of personal assets in the form of Samsung Life Insurance Co shares to make up for the loss by creditors of Samsung Motors.

The Samsung Group said most of the shares will be handed over to Samsung Motors' creditors while some of them will be cashed to help support Samsung Motors' suppliers.

Samsung Motors' debts amount to 4.3 trillion won, including 1.2 trillion won of loans extended by Samsung affiliates.

"Given that Samsung Life Insurance shares and Samsung Motors' assets are worth between one trillion and 1.5 trillion won, creditors will therefore be compensated for most of their loans," vice-president Lee Dai-Won of Samsung Motors said.