Saab gets a glimmer of hope from the Swedish government
Saab and parent company Swedish Automobiles originally requested government protection from creditors when their banks began receiving notices of possible bankruptcy proceedings earlier this month but the Swedish government quickly stepped up and shot down Saab’s request. Without protection from the government, Saab is open to bankruptcy claims from both creditors around the world as well as their various auto workers unions that have frequently gone unpaid over the past few months. Saab’s request for protection from bankruptcy as they underwent a reorganization process was turned down by the government because they believed that nothing would help to save the struggling company but this denial came with the right to appeal this decision. Saab quickly appealed while continuing to pursue other ways to gather the massive chunk of money to pay their workers and creditors and a higher court has granted Saab the right to appeal the original decision.
Saab will now be allowed to re-apply for government protection by attempting to prove that their reorganization plans will indeed save the company from going under. Saab recently entered into a bridge loan guaranteed by one of their Chinese investors and the automaker will likely use that money to show that they can indeed pay their bills and wages but as we need the end of September; they will soon owe their workers more money and without production – where will Saab find the next life-raft in the form of money? This is likely the same question that they will face when applying for government protection for the second time and with the company unable to answer this question the first time, how will they convince the government that this plan will work?
The Saab labor union has already filed the paperwork to begin the bankruptcy proceedings against the automaker with the first hearing set for September 26th. Should Saab once again be denied protection, they will likely have a hard time being granted another appeal unless something big happens. Right now, the company is banking on the approval of the buy-in by Chinese firms Pang Da and Youngman Lotus but with the Chinese government dragging their feet (with many believing that approval will never come), Saab may need more help than the Chinese investors can provide.
For now, Saab has another chance to plead for protection from the Swedish government but if they fail this time in showing that their reorganization will save the company while repaying all of their debt, the company will face the first step towards court-required bankruptcy. Results of this appeal are expected to come as soon as this week so it may not be long before we know what the future holds for Saab.
Other News on the saga of the Saab brand:
Saab to face first bankruptcy hearing on September 26th
Saab’s request for government protection denied – bankruptcy appears imminent
Saab files for government protection, plans reorganization
Swedish debt authority prepares to seize Saab assets
Source: Automotive News