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Court provides bankruptcy lifeline to Saab
Source: Agencies |
September 22, 2011, Thursday
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Print Edition
Print Edition
A SWEDISH appeals court tossed a lifeline yesterday to cash-strapped carmaker Saab, approving its application for bankruptcy protection as it awaits funding from Chinese investors.
The ruling by the Court of Appeal for Western Sweden, overturning a lower court's decision, gives Saab three months to reorganize while being protected from creditors, some of whom have already filed bankruptcy petitions against the company.
Saab has struggled financially since General Motors Co sold it in 2010 to the Netherlands-based company that is now called Swedish Automobile. Production at Saab's plant has been suspended for most of the year while the company has struggled to pay suppliers and staff.
But Chief Executive Victor Muller insists he can turn the company around as soon as it receives 245 million euros (US$335 million) in cash injections from Chinese investors Zhejiang Youngman Lotus Automobile Co and Pang Da Automobile Trade Co.
Chinese authorities have not yet approved those deals.
The Vanersborg District Court had rejected Saab's application for reconstruction two weeks ago, citing uncertainties regarding Saab's ability to raise funds. The appeals court overruled that decision, saying "the prerequisites for a successful reconstruction exists."
During the reconstruction process, which will last three months but can be extended, the Swedish government will pay Saab workers salaries.
Swedish Automobile said it will ask labor unions to recall their bankruptcy filings against the company. It said it aims "to secure short-term stability while simultaneously attracting additional funding, pending the inflow of the equity contributions by Pang Da and Youngman."
Unionen, a white-collar union, welcomed the ruling and said it would withdraw its bankruptcy filing.
The ruling by the Court of Appeal for Western Sweden, overturning a lower court's decision, gives Saab three months to reorganize while being protected from creditors, some of whom have already filed bankruptcy petitions against the company.
Saab has struggled financially since General Motors Co sold it in 2010 to the Netherlands-based company that is now called Swedish Automobile. Production at Saab's plant has been suspended for most of the year while the company has struggled to pay suppliers and staff.
But Chief Executive Victor Muller insists he can turn the company around as soon as it receives 245 million euros (US$335 million) in cash injections from Chinese investors Zhejiang Youngman Lotus Automobile Co and Pang Da Automobile Trade Co.
Chinese authorities have not yet approved those deals.
The Vanersborg District Court had rejected Saab's application for reconstruction two weeks ago, citing uncertainties regarding Saab's ability to raise funds. The appeals court overruled that decision, saying "the prerequisites for a successful reconstruction exists."
During the reconstruction process, which will last three months but can be extended, the Swedish government will pay Saab workers salaries.
Swedish Automobile said it will ask labor unions to recall their bankruptcy filings against the company. It said it aims "to secure short-term stability while simultaneously attracting additional funding, pending the inflow of the equity contributions by Pang Da and Youngman."
Unionen, a white-collar union, welcomed the ruling and said it would withdraw its bankruptcy filing.
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