...

Saab to file appeal on reorganization application

Business Materials 9 September 2011 12:01
Struggling carmaker Saab's chief executive Friday repeated that the group would appeal a court ruling that rejected its application to reorganize its business as it seeks additional funding.
Saab to file appeal on reorganization application

Struggling carmaker Saab's chief executive Friday repeated that the group would appeal a court ruling that rejected its application to reorganize its business as it seeks additional funding.

"We will provide as much information as we can, and we anticipate filing by Monday" Victor Muller, who is also president of Saab, told Swedish Radio news.

Saab's application for voluntary reorganization was rejected Thursday by the district court in Vanersborg, DPA reported.

In its five-page ruling the court noted that Saab was unable to pay its outstanding debts, one of the prerequisites for undergoing reorganization.

The court also said it was "unclear" how the company could solve its funding and resume operations, which was another prerequisite.

In its rejected application, Saab and its Dutch-based owner Swedish Automobile said the voluntary reorganization process aimed at securing short-term stability pending funds from Chinese groups Pang Da and Youngman.

Muller said Friday that Saab had sufficient funds to pay salaries but had also to deal with claims from suppliers. "By law" Saab could not favour one group of creditors - the employees - over another, he said.

The court noted that the application did not offer sufficient details of when regulatory authorities in China would give approval, or other possible investors.

Muller said the appeal aimed at dealing with those issues. If the appeal court application fails, the company would likely try to appeal to the supreme court.

He ruled out filing for bankruptcy, citing "if you are responsible for 3,500 employees the last thing you want to explain to them is we gave up because we were too afraid."

Time is however running out, since the unions at Saab have collected powers of attorney from members as part of efforts to pressure the company to pay the wages.

The unions have an option to file a bankruptcy petition against the carmaker. This would enable salaries be paid under a wage-guarantee programme.

Production at the company's main plant in Trollhattan, western Sweden, has been at a virtual standstill since April and wage payments have been late for three months in a row.

Swedish Automobile, formerly Spyker Cars, took over Saab from US automotive group General Motors in early 2010.

Last week, Saab reported a net loss of 224 million euros (315 million dollars) for the six-month period January to June, when it sold fewer than 13,000 cars.

Latest

Latest