Saab has today filed for voluntary reorganisation – the Swedish form of company administration – as it continues its battle to remain in business.
Saab bosses have decided that as the firm has so little cash, only the ‘voluntary reorganisation’ (similar to Chapter 11 in the US) will realistically allow it to use what little resource it has in the best possible way. The plan remains to prepare the firm for the proposed partnership with Chinese firms Pang Da and Youngman.
Saab bosses are confident they’ll come up with short-term cash to fund the reorganisation period. Crucially, it should be protected from creditors and it will also apply for the Swedish state wage guarantee scheme. It has struggled to pay employee wages for several months now.
An independent administrator appointed by a Swedish court will work with the Saab Automobile management team, to come up with a plan for reorganisation. This will be focused on creating a viable going concern with lower costs. Plans are expected to be presented within three weeks.
The reorganisation period initially lasts three months, although courts can extended it for up to 12 months.
Victor Muller, CEO of Swan and CEO and Chairman of Saab Automobile, said: ‘Since securing the long-term funding through conditional agreements with Pang Da and Youngman, who both support this voluntary reorganization, we have focused on securing funding to bridge the period until we receive their funds.
‘We have concluded that a voluntary reorganization process will provide us with the necessary time, protection and stabilization of the business, allowing salary payments to be made, short-term funding to be obtained and an orderly restart of production to be prepared.’
Muller also reminded people Saab is sitting on an order bank of 11,000 orders and that the conditional long-term funding that’s already in place will give Saab access to the Chinese car market – now the largest in the world.
The issue is short-term funding, which is what today’s voluntary reorganisation application intends to overcome.
