Saab gets leave for creditor protection application

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Saab gets leave for creditor protection application

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UPDATE: Saab gets some room for breathing space as a Swedish court of appeals overturned a lower court's decision and gave the latter creditor protection while waiting for more Chinese investments. According to the ruling, the court does not see "no reasonable reason to consider the goal with a reconstruction could not be met."

In response, Saab's blue-collar labor union IF Metall also said that there is no more reason to go on with the bankruptcy application that they had filed as the court resolution will give the company the breathing space that it will need in order to come up with a viable long-term business plan. All's well that ends well. For now.

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Swedish car manufacturer Saab has just been given a lifeline. In a ruling by a Swedish court, the automaker was given a leave to appeal a lower court's decision to deny the application of Saab to protect itself from creditors. Not much information was given to expound on the ruling, but this decision will come as a good way for the company to buy more time as it is threatened by bankruptcy.

To justify its appeal for a leave, the Swedish automaker cited the investment funds that it received from a Chinese firm earlier this week in the form of bridge financing costing up to 70 million euros. The company currently owes its employees its wages for the month of August, as well as $207 million to its suppliers. It has already ceased further production for the last few months because of its inability to pay up debt and further production costs.

Saab also earlier sought creditor protection from Swedish courts but it was turned down. Afterwards, it was able to secure the extra investments and applied for an appeal, which will be decided on most probably this week. Despite this, the company will also have to attend a bankruptcy hearing next week, after the employees applied for bankruptcy themselves. If Saab gets declared as bankrupt, the employees will be able to get their unemployment benefits from the welfare state.

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Tags: • unemployment • financing • investment • automaker • union • reconstruction • investments • saab • welfare state • unemployment benefits • investment funds • business plan • labor union •

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