Struggling Saab wins right to creditor protection

ERJ staff report (AN)

Stockholm, Sweden (Reuters) -- Struggling car maker Saab today won fresh breathing room in its fight for survival when it won a court appeal to be given protection from creditors while it awaits Chinese investment.

A court of appeal in west Sweden said in a statement it had overturned a lower court decision which had rejected allowing Saab the protection it sought.

Saab hopes creditor protection will allow it to survive until China's authorities okay a 245 million euro ($334 million) investment by car firms Youngman and Pangda

Saab, which owes August wages to its around 3,600 workers and 150 million euros ($207 million) to suppliers, sought protection from creditors this month, but was turned down by a lower court.

Saab, owned by Dutch company Swedish Automobile NV, had backed up its appeal by pointing to, among other things, a promise of new funding received early last week.

The lower court rejected the application for protection from creditors on the grounds that Saab had already been through one, in 2009-2010, and that promises of financial aid were too vague.

Last week, Saab agreed 70 million euros bridge financing with the help of a guarantee from Zhejiang Youngman Lotus Automobile Co.

Production at Saab has been more or less at a standstill since April when unpaid suppliers stopped providing deliveries to the automaker.

Three of Saab's own unions and a supplier have asked the courts to declare it bankrupt. Blue collar union IF Metall, which represents 1,500 Saab workers, was the latest to file against the automaker on Tuesday.

Sweden's debt collection agency had already begun seizing assets at the request of unpaid suppliers.

On Tuesday, Swedish Automobile said that Saab was not insolvent, but has temporary liquidity problems that it expects to solve following planned equity contributions by the two Chinese companies.

Regulatory approval for the deals is expected in November, it added.

From Automotive News (A Crain publication)