Swedish car maker Saab halted production of its vehicles back in June because of cash flow problems. Now today we have some more Saab news as its woes continue with bankruptcy protection move. The company filed for protection from creditors as it bids to raise money to resume production.
The bankruptcy filing was made today at the Vaenersborg District Court to protect the car maker from a bankruptcy petition from unions, according to Bloomberg. If it gets approved the process will last three months, and according to Saab can be extended to last a year.
Chief Executive Officer Victor Muller said via a statement “We have concluded that a voluntary reorganization process will provide us with the necessary time, protection and stabilization of the business”.
Saab was sold by General Motors in 2010 and had first halted production back in March due to cash shortages, and after briefly restarting stopped completely at the beginning of June. Last month the company delayed paying staff wages that was the third time it had done so. This led to labor leaders to begin the process of a bankruptcy order.
Saab is planning to provide a restructuring plan to its creditors in the next few weeks, and make the company into a more competitive company. Swedish lawyer Guy Lofalk, who oversaw Saab’s reorganization under GM in 2009, has been put forward as an administrator by the company.
It can apply for a state guarantee for the workers’ wages if the move wins court approval. Saab’s biggest union IF Metall that represents around 1,500 workers has promised to hold off forcing the company into bankruptcy.
Saab has been trying to gain funding for months, and was close to securing a $155 million. Trouble is the manufacturer is running at a loss. Last year it only sold around 30,000 cars but needs to shift 120,000 just to break even. When the company ran out of money last year it took longer to get production rolling again and launch the new 9-5 model.
GM had emptied the factory of equipment as it was planning to completely shut the company down, but later sold Saab for $400 million to Spyker cars NV. Do you hope Saab can survive this latest crisis?