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Saab denied bankruptcy protection

Swedish court rejects carmarker’s attempt to shield itself from creditors while it tries to raise new funds from China

Saab’s bid to shield itself from its creditors while it tried to find new funding has been turned down by a Swedish court.

The judgment on Thursday paves the way for trade unions to try to get the company declared bankrupt. Their members have not been paid by the company for three months.

The Vänersborg district court said it was unclear how the cash-strapped company intended to secure further funding and continue its operations.

The court noted that Saab was awaiting regulatory approval for cash injections from two Chinese companies. “It appears unclear if – and if so when – the relevant Chinese authorities will approve the agreements,” the court said.

The ruling opens the way for potential bankruptcy action from unions representing Saab’s 3,700 employees.

Saab applied for bankruptcy protection on Wednesday, 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 the company has struggled to pay suppliers.

It was not immediately clear if Saab would appeal against the ruling. © 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