Saab asks Swedish court to pull the plug on bankruptcy protection

Article by Christian A., on October 21, 2011

Hours after an investment firm pledged cash to Saab, the administrator responsible for its reorganization asked a Swedish court last Thursday to pull the plug on bankruptcy protectiocarn. For several months, Saab has been trying to fight off bankruptcy. It had expected that creditor protection would give it enough time to restructure as it waits for Chinese investors to give new funds.

However, there would be little chance of it surviving if the court believes that the reconstruction efforts failed. According to Saab administrator Guy Lofalk, there is insufficient money for the reorganization to continue running.

He then asked a Swedish court to end the entire process. He added that the original reorganization plan and its financing strategy have not materialized yet.

It’s possible that the court will stop the reorganization and creditor protection process as early as Friday. This means that the creditors or maybe even Saab could ask that the company be declared bankrupt.

According to Swedish Enforcement Authority official Hans Ryberg, the agency will continue efforts to snatch any Saab assets left to recover debts owed to suppliers if the reorganization is halted.

In a statement, Saab said that it will oppose Lofalk's application and will request for his replacement. Saab continues to face difficulties even when an investment firm of racing car enthusiast Alex Mascioli said it will invest $70 million in Saab as Chinese bridge financing appeared unsure. [source: Reuters]

Topics: saab, sweden

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