Ailing carmaker Saab was pushed closer to bankruptcy today after a Swedish court rejected its application for protection from creditors while it awaits vital Chinese investment.
The court decision could open the way for Saab itself, unions or creditors to seek bankruptcy for a company which has made vehicles for more than 60 years, but where a chronic shortage of cash has halted production and left suppliers unpaid for months.
Saab can appeal the decision up to September 29th, but a court spokeswoman said that while Saab had no court protection creditors could still seek to make it bankrupt.
"Overall, the court finds that it is unclear how the company would be able to solve its liquidity crisis and continue operations," said the decision by the Vanersborg district court in west Sweden.
The powerful IF Metall union was the first to say it was now considering seeking Saab's bankruptcy. Unions have said they would do this to activate a state scheme to pay wages.
"I had really hoped for a positive decision from the court. Saab and our members would have deserved some breathing space," said IF Metall head Stefan Lofven.
"If the company itself does not find another solution or seek to put itself into bankruptcy we could be forced to do so in the next few days."
Saab, based in the western town of Trollhattan, was rescued from closure by General Motors Co in early 2010 by Amsterdam-listed Spyker Cars, now called Swedish Automobile.
Swedish Automobile had said it wanted protection from creditors to stop them pushing the car firm into bankruptcy and to allow it to work on securing its future as it waits for investments from two Chinese car companies, Pangda Automobile Trade Co Ltd and Zhejiang Youngman Lotus Automobile.
They have agreed to take a combined majority stake in the firm for a total of €245 million but the investments need official Chinese approval.
The court said it was not clear if this would be forthcoming and that Saab had only provided very general information about negotiations for other financing options.
The court said there was no reason to believe a new creditor protection process, known as a reconstruction, would work. Saab, when it was owned by General Motors, went through a reconstruction in 2009-2010.
No one at Saab was immediately available for comment.
Chinese authorities have halted planned investments in the past. This included Saab's failed deal with Hawtai Motor Group in May and Sichuan Tengzhong Heavy Industrial machinery's bid for GM's Hummer, which collapsed in 2010.
"They are more or less broke and now the company is in the hands of the unions," Tom Muller, analyst from Theodoor Gilissen in Amsterdam said.
He said that unions might wait a day or two to see if Swedish Automobile chief executive Victor Muller can scrape together some more cash before they seek bankruptcy.
Reuters