After a protracted battle for financial stability, Saab has filed for government protection. The official filing submitted this morning in Sweden isn't a liquidation, however, it's a bid for reorganization with the assistance of a government-appointed independent overseer. Saab boss Victor Muller:
"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."Under Swedish law, Saab's reorganization plans must be presented within three weeks, though a court-granted extension is possible. If Muller and Co. clear this initial hurdle, the reorganization will have an initial three month window in which to be effected, although that window can be extended in three-month increments for up to a year. While Saab is busy trying to cut costs and rework its infrastructure, its emissaries will also be seeking short-term funding.
For its part, the Swedish government must accept Saab's filing for protection. Further, if the automaker wishes to stay in business, government officials will also need to agree to grant Saab access to the state's "wage guarantee scheme," meaning that Sweden must agree to pay the automaker's employee wages (including August) during the reorganization process.
