Swedish courts have approved voluntary reorganization for Saab Automobile. The Swedish automaker filed for reorganization, which provides Saab some protection from its creditors, two weeks ago. That initial request was denied, but Saab appealed the decision.
Saab reportedly owes millions to suppliers and has not paid employees for several months. Voluntary reorganization is similar to the Chapter 11 provisions in American tax code, keeping Saab protected from its creditors while the company is restructured.
Saab’s first application for voluntary reorganization was rejected because Swedish courts didn’t believe the company would be able to successfully restructure itself. An appeals court, however, ruled that it’s possible Saab could emerge from bankruptcy if allowed to restructure.
Under the new agreement, Saab will have three months to attempt to turnaround its business. The company said in a statement it plans to “secure short-term stability” using cash from deals with Chinese companies Pang Da and Youngman. In addition to its larger joint partnerships with those companies, Saab recently announced plans to license its Phoenix platform to Youngman Lotus. The Phoenix architecture was expected to underpin the next-generation Saab 9-3.
Labor unions representing Saab employees had filed for bankruptcy earlier this week because employees haven’t been paid for so long. In a statement yesterday, the company said that Saab Automobile was “not insolvent and [has] only temporary liquidity problems.”
Sources: Saab, The Wall Street Journal