Suffering from a severe cash shortage, Pantech Co., South Korea's No. 3 handset maker, filed for court receivership Tuesday with a Seoul court five months after it was placed under a debt workout program.

"We want to deeply apologize for failing to fulfill the responsibility and role as a company, which resulted in applying for court receivership," the company said in its official statement to investors after the decision was approved by its board of directors.

"We will continue to make strenuous efforts to normalize management as soon as possible by pooling together all possible means, no matter what the challenges are," Pantech added.

The company's initial successes had been hailed as legendary. It split off in 1991 from pager manufacturer Maxon and had climbed up to rank No. 2 in the local smartphone market.

The latest development came nearly two months after Pantech's creditors, led by the Korea Development Bank, decided to seek a debt-equity swap of 480 billion won (US$467.61 million) for the troubled company.

While the creditors asked the three mobile carriers -- SK Telecom Co., KT Corp. and LG Uplus Corp. -- to join the program by chipping in 180 billion won, they have been passive toward repeated requests, with some insisting that the fate of Pantech should be decided by the market system.

The carriers instead agreed to extend the deadline for Pantech's debts, worth 153 billion won, for two years without imposing any interest payment, but that was not enough to pull the country's smallest smartphone maker from the nadir.

While Pantech had already 36 billion won worth of debt overdue, it also failed to recoup a debt of 20 billion won that was due Monday.

Pantech claims about 10 percent of the domestic handset market, which pales in comparison with lead player Samsung's 60 percent and LG's 15 percent.

Under court receivership, Pantech will be ordered to hand in its normalization plan to the court within two months.

Industry watchers said the court is likely to approve Pantech's receivership, as its liquidating value currently stands at 189.5 billion won, whereas the going-concern value is around 382.4 billion won.

Pantech could also be acquired by foreign companies, possibly from India and China, which have been making strides to catch up to No. 1 Samsung. Such a move, however, could have an adverse impact on the South Korean industry as a whole due to the outflow of technology and know-how, according to industry watchers.

Industry watchers said that with over 500 suppliers dependent on Pantech, the company's troubles may spark a series of bankruptcies among the country's small- and medium-size enterprises.

Pantech graduated from a five-year debt rescheduling program in December 2011. But its financial footing weakened again as it struggled with falling sales from increased competition in the local smartphone market dominated by Samsung and LG. It had returned to a workout program in March. (Yonhap)