Bankruptcy looms for Saab as restructuring

Beleaguered Swedish carmaker Saab said on Thursday the administrator of its reorganisation plans to ask the court to halt the process, in a move that could force the company into bankruptcy. Guy Lofalk, who has been appointed by the Vaenersborg district court in southwestern Sweden to oversee Saab's three-month restructuring process under bankruptcy protection, had informed the company he would ask that the process be terminated, Saab's Dutch owner Swedish Automobile (SWAN) said in a statement. Although the statement did not provide an explanation, Lofalk's decision indicates he does not think the restructuring will be successful. If the court grants his petition, thousands of individual requests from unionised company employees and suppliers for Saab to be declared bankrupt, which have been put on ice during the reorganisation, will be activated again. "Saab Automobile shall contest this application and request for continuation of the voluntary reorganisation process," SWAN said, adding that it also planned to "apply at the court for replacement of Mr. Lofalk as administrator." Lofalk could not be immediately reached for comment. Due to a mountain of unpaid bills, suppliers have stopped deliveries and production at the carmaker has been virtually halted since April. A number of Saab's some 3,700 employees also saw their salaries delayed three months in a row. The company's charismatic chief executive Victor Muller however convinced a Swedish appeals court last month that it would be possible for Saab to land on its feet if it could just keep its creditors at bay until regulatory approval goes through for its anticipated cash injection of 245 million euros ($335 million) from its Chinese partners Pang Da and Youngman. The company, which says it has about 150 million euros in outstanding debt, has said it expects that cash injection in November. SWAN pointed out that Lofalk conveyed his decision only shortly after the company on Thursday announced it had secured funding from US private equity firm North Street Capital, which is set to buy $10 million worth in shares on Friday and provide a loan of $60 million by the middle of next week. That statement was not all good news however. SWAN said it would accept the deal since "it has doubts that the (70-million-euro) bridge funding of Youngman and Pang Da, of which a partial payment has been received, shall be paid in full on October 22, 2011. "Immediate availability of funding is necessary to continue the reorganisation process of Saab Automobile," it pointed out.