Marcus Evans Group | Worldwide Headquarters | American Offices | Latin America | European Offices | African / Asian Offices

Saab denied bankruptcy protection

Struggling carmaker’s plans thrown into chaos as local court expresses doubt about its restructuring proposals

Saab, the Swedish carmaker, has been plunged into chaos because a local court has denied its request to seek protection from creditors, on the grounds that its rescue plan looks flawed.

As part of its application for protection, Saab’s parent company, Swedish Automobile, had promised to speed up plans by two Chinese car firms to take a combined majority stake in the business, but the court in Vänersborg district was sceptical. “The court has concluded that there is not enough reason to believe that a company reorganisation would be successful,” said Judge Gunnar Krantz. “The company’s request is therefore rejected.”

But Victor Muller, chief executive of Swedish Automobile, said there was still hope for the business. “We are not dead yet. We were not dead yesterday, we are definitely not dead today,” he told Swedish news agency TT.

Saab can still appeal against the ruling, but there is increasing expectation that creditors or trade unions, frustrated that the company’s 3,700 staff have not been receiving pay, could move to bankrupt the 60-year-old vehicle manufacturer.

The unions would do so in a bid to trigger payments to the workers under local law. “We will now thoroughly analyse the new situation,” said Stefan Lofven, a leader of the IF Metall union. “If the company doesn’t find another solution or file a bankruptcy request themselves, we may be forced to do that in the next few days.”

Saab is just one of a number of global car companies that have gone through very tough times as the 2008 financial crisis tore the bottom out of the market.

In June, Saab said two Chinese companies, Pangda Automobile Trade Co and Zhejiang Youngman Lotus Automobile, had agreed to take a combined majority stake in the firm for a total of €245m (£214m).

But analysts from IHS Global Insight are sceptical about whether this will come to anything. A research note for investors released on Wednesday said: “Even the Chinese companies, which are often linked with such sell-offs, would be an outside chance as Saab has no proprietary technology and thus is of little value to the Chinese carmakers.”

Saab applied for bankruptcy protection on Wednesday – for the second time in as many years – saying it needed breathing room to find short-term funding and restart production at its plant in Trollhättan in south-west Sweden.

The factory has been at a standstill for most of the year as car parts suppliers are already said to be owed more than £100m and are reluctant to work further with them for fear of never being paid.

The company admitted last month that it had lost €224m in the first half of the year – four times as much as the deficit it ran up during the same period of 2010.

Saab was owned by General Motors of the US but was sold to a Dutch firm, Spyker Cars, last year. Saab was divested at the same time as the Hummer, Pontiac and Saturn brands were closed down as GM, which emerged from its own bankruptcy proceedings in 2009, decided to concentrate all its resources on its big American marques: Buick, Cadillac, Chevrolet and GMC. © 2011 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds