The owner of cash-strapped car maker Saab filed for bankruptcy protection on Wednesday in a last-ditch attempt to salvage a brand crippled by production stoppages, withheld salary payments and mounting debt.
Swedish Automobile, formerly known as Spyker Cars, said the move would buy it time to receive funding from Chinese investors, currently awaiting regulatory approval, and avoid bankruptcy.
The company, led by Dutch businessman Victor Muller, has so far failed to revive the loss-making Swedish brand since taking it over last year from General Motors, which was in the process of dismantling it.
The Saab factory in Trollhattan, southwestern Sweden, has been at a standstill for most of the year as the company struggles to pay suppliers. Since June it hasn't been able to pay many of its 3,700 workers on time, testing the patience of labor unions who have threatened to put the company in bankruptcy.
If approved by the Vanersborg district court and Saab's creditors, an initial three-month court-administered reorganization phase would halt any debt collection and potential bankruptcy filings. A decision was expected on Thursday, court spokeswoman Elisabeth Lindstrom.
Muller said the voluntary reorganization will help stabilize the company and give it the breathing room to restart salary payments, get short-term funding and set in motion a production restart. At present, Muller said Swedish Automobile has unpaid bills of about euro150 million ($210 million).
Saab and its subsidiaries Powertrain and Tools are included in the plan for a voluntary and "self-managed" reorganization, while overseas units have been excluded.
The application for creditor protection, similar to a Chapter 11 bankruptcy filing in the U.S., calls for cutting costs. Muller warned that that the process would lead to "a number of tough issues and decisions."
Once Saab has been brought out of reorganization, Muller said he plans to hand over the CEO post to someone else, but not before.
"Quitting for me is not an option," he told a news conference.
Darko Davidovic, union legal adviser for IF Metall which represents around 1,500 Saab workers, welcomed the move. "It is the fastest way for our members to get their money unless the company pays up itself," he told The Associated Press. "All other alternatives would have been worse," referring to a potential bankruptcy which would have drawn out payments.
The Swedish National Debt Office, which guaranteed a euro280 million ($395 million) loan from the European Investment Bank to Saab, supports a reconstruction, director Bo Lundgren told reporters in Stockholm.
"This is likely something that is good for Saab, for it to get some breathing space and get an organized process going instead of this hyperventilating it has been through," Lundgren said.
Muller expressed bitterness that Russian investor Vladimir Antonov was earlier this year stopped by the European Investment Bank, among others, to invest in Saab.
"He was willing to put in euro100 million in this company at a time when euro30 million would have been adequate," he said. "For us, it is extraordinarily frustrating, and he is very upset as a potential investor."
Muller said he's now pegging hopes on cash injections of euro254 million ($358 million) from Chinese investors Zhejiang Youngman Lotus Automobile Co. and Pang Da Automobile Trade Co.
The agreements include the manufacture and distribution of Saab cars in China, but have been delayed because of pending approvals from Chinese authorities.
He said all suppliers his company had been in contact with have shown support for the planned reorganization.