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Saab Wins Chance to Reorganize

Appeals courts accepts plans.

by on Sep.21, 2011

Image By: Len Katz

Saab boss Victor Muller now has 90 days to get the company's finances in order.

A Swedish appeals court has given Saab what amounts to a reprieve, a chance to raise cash and pull its finances into order rather than plunge into a bankruptcy process many believe would result in the closure of the long-troubled automaker.

The decision for the Court of Appeals for Western Sweden reverses an earlier court decision rejecting Saab’s request for a 90-day window in which it would be protected from creditors that include key parts suppliers as well as more than 3,000 Swedish workers.  The reorganization process is somewhat similar to an abbreviated version of the American Chapter 11 bankruptcy filing.

Saab officials have repeatedly said they eventually plan to pay off all of their outstanding debts in full.  But the cash-starved maker is waiting for two proposed Chinese deals to wend their way through that country’s labyrinthine bureaucracy.  In the meantime, Saab has received a $96 million bridge loan it hopes to apply to some of its bills and operational costs until the alliances with China’s largest auto distributor Pangda, and automaker Zhejiang Youngman Lotus Automobile are approved.

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It does not appear likely, however, that the maker will yet be able to re-open the headquarters assembly plant, in Trollhattan, that has been shuttered since suppliers began a boycott in late March.