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Struggling Saab wins reprieve

Tags: Saab

Struggling car maker Saab gained fresh breathing room in its fight for survival on Wednesday when it won a court appeal to be granted protection from creditors while it awaits Chinese investment.

A court of appeal in west Sweden said in a statement it had overturned a lower court decision which had rejected allowing Saab the protection it sought, known as a reconstruction.

It said there was "no reasonable reason to consider that the goal with a reconstruction cannot be met."

Saab hopes creditor protection will allow it to survive until China's authorities approve a 245 million euros ($336 million US) investment by car firms Zhejiang Youngman Lotus Automobile and Pangda.

Saab, owing August wages to workers and 150 million euros to suppliers, sought protection from creditors this month, but was turned down by a lower court.

Owned by Netherlands-listed Swedish Automobile, the company backed up its appeal by pointing to, among other things, agreement for 70 million euros of bridge financing with the help of a guarantee from Youngman.

Three unions representing workers at Saab have sought the company's bankruptcy to activate a state scheme to pay wages. But creditor protection also activates that scheme.

Blue collar union IF Metall said in a statement this meant its bankruptcy application was no longer needed.

"Now the company and its employees will get a much needed breathing space systematically to develop a long-term business plan," IF Metall chairman Stefan Lofven and the IF Metall Saab chapter head Hakon Skott said in a statement.

Production at Saab has been more or less at a standstill since April when unpaid suppliers pulled the plug on deliveries.

Sweden's debt collection agency had already begun seizing assets at the behest of unpaid suppliers. CTV Two CTV News CTV News Channel BNN - Business News Network CP24