Swedish unions take bankruptcy action against Saab.
While we can fully understand the actions of the Swedish unions, we are still staunch believers in the future of the Swedish car maker.
Swedish unions take bankruptcy action against Saab
Two Swedish trade unions filed bankruptcy petitions Monday against Saab Automobile, pressuring the troubled automaker to present a viable funding solution or face collapse within weeks. Saab has struggled financially since General Motors Co. sold it in 2010 to the Netherlands-based company that is now called Swedish Automobile.
Vänersborg District Court spokeswoman Elisabeth Lindström said white-collar unions Unionen and Ledarna took bankruptcy action against Saab, which means a bankruptcy hearing will be held within three weeks. At the hearing, Saab has to prove it has enough funds to pay bills to avoid bankruptcy or it can seek respite for another two weeks if it can show that money is in the pipeline, Lindström explained. The union moves came after a district court last week rejected an application for bankruptcy protection from Saab. ADVERTISEMENT
The filing Monday means Saab's hopes for survival are now pegged to two things; having its bankruptcy protection application approved by an appeals court or securing more funds and regulatory approvals before the bankruptcy hearing. Production at Saab's manufacturing plant has been suspended for most of the year while the company has struggled to pay suppliers and staff. Saab has hoped for a $344 million cash injection from Chinese investors Zhejiang Youngman Lotus Automobile Co. and Pang Da Automobile Trade Co., but is still awaiting regulatory approval from China's National Development Reform Commission. Saab spokesman Eric Geers described the unions' decision as "unfortunate," but said he expects a ruling from Chinese authorities shortly.
"Both Youngman and Pang Da are convinced that this is proceeding exactly as they expected and they are also expecting a positive outcome," Geers said. The Swedish government will meet Tuesday with officials from China's NDRC to explain the Swedish legal situation and the urgency of the matter, government spokesman Håkan Lind told The Associated Press. In the meantime, Saab has signed a temporary bridge financing agreement with Youngman, whereby it will receive a $95 million upfront payment from the Chinese company in return for a technology license, Saab said Monday. Geers said the deal, which is subject to approval by a lender, could help Saab in its appeal for bankruptcy protection, which it filed with the appeals court Monday.
The trade unions said they took bankruptcy action against Saab to secure payments to its members, who still haven't received their August salaries. Local Unionen leader Cecilia Fahlberg regretted that the union had to take this step but said it was the only way to secure payments to its members, who will receive a government-funded salary guarantee if their employer is declared bankrupt. "This is not a situation that any Unionen member wished for," she said, adding that the action won't stop any potential financial solutions. Metalworkers union IF Metall and The Swedish Association of Graduate Engineers earlier Monday announced that they would hold off bankruptcy action until the appeals court had reviewed Saab's request for bankruptcy protection. They said Saab's intensified talks with Chinese investors over the weekend could improve the company's chances to acquire approval for a reconstruction from the appeals court.