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Saab Auto's Reorganization Stalls

December 7, 2011
2 min to read


STOCKHOLM — The administrator overseeing stricken Swedish car maker Saab Automobile's restructuring is seeking to end the process, potentially paving the way for creditors to put the 64-year-old brand into bankruptcy, Saab's owner Swedish Automobile NV said on Wednesday.


Administrator Guy Lofalk filed a court application to end the voluntary reorganization of Saab Automobile and two subsidiaries, the Netherlands-based company said. Saab Automobile and its creditors will now have until Dec. 15 to submit their views before the court decides on Dec. 16 whether to terminate the restructuring, reported The Wall Street Journal.

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In his application to the court, the administrator, Guy Lofalk, said that the car maker lacks sufficient funds to continue the reorganization. Mr. Lofalk couldn't immediately be reached for comment.


Saab has been operating under creditor protection since September, as it tries to restructure its operations. Should the court terminate the restructuring process, the protection will end and applications from suppliers for the company to be ruled bankrupt are likely to be reactivated.


Production has been suspended since April due to a lack of sufficient funds to pay suppliers and employees. Plan by two Chinese companies—Zhejiang Youngman Lotus Automobile Co. and Pang Da Automobile Trade Co.—to invest in the firm have run into trouble due to resistance from its former owner General Motors Co.


GM, which owns the technology on which several Saab models are based, doesn't believe that a Chinese takeover of Saab would be in the best interests of its shareholders given its sizeable Chinese operations. It has said it won't continue to license its technology to Saab under the proposed ownership change.


Swedish Automobile said on Monday it is in talks with Youngman and a bank in China about taking an equity interest in Saab Automobile.

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"Youngman is the one we are talking to right now. We are working hard on this, day and night," Saab Automobile spokesman Eric Geers said but declined to go into detail on the deal and declined to say whether Pang Da Automobile Trade Co. is now out of the picture.

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