Saab denied bankruptcy protection

The former General Motors brand has been catapulted closer to financial oblivion after being denied bankruptcy protection.

A Swedish court overnight denied the application for bankruptcy protection made by the company, which has been teetering on the brink of oblivion for more than a year after being sold by GM, with a failed bid to give it traction from supercar maker and new owner, Spyker.

Saab owner, Swedish Automobile – formerly Spyker Cars -- filed the voluntary  bankruptcy protection application in the District Court in Vanesborg, Sweden.

The application wasintended to protect Saab from creditors while giving it time to obtain further funding, start a reorganisation plan and restart production, while continuing being able to pay salaries.

Saab’s Trollhattan factory in Sweden has been stalled, and the inability to pay its 3700 workers for the past two months has led to bankruptcy threats from labour unions.

The company is seeking three months of court-appointed protection from its creditors while it awaits Chinese regulatory approval for its AUD$325 million joint-venture deal with Pang Da Automobile and Zhejiang Youngman Lotus Automobile.

The bankruptcy protection and any court decision does not include Saab Australia, whose managing director Stephen Nicholls says the overnight news was an unwelcome surprise.

"Obviously the news is not something we were hoping to wake up to," Nicholls says. "We were hoping the court would grant this. But obviously we are going to appeal the decision, and it will take about a week to go through the process and lodge the appeal.

Nicholls says he doesn't have detailed information on why the application was refused, but that the appeal would make a stronger case.

"I haven't seen the judgement itself and I'm not qualified to comment on the details of the judgement. But we believe there must have been some shortcomings in the submission as we believe the case itself is sound," he says. "We just need to plug these gaps and supply extra information if required, and we're confident it will then be successful. The burden of proof is just to demonstrate we have the funds, and we're going to go back to the drawing board and this time overload them with information."

Nicholls says that the operations of Saab in Australia are not affected by the court decision. "Saab Cars Australia was explicitly excluded from the application -- as was the US and so on. But ultimately our  fate is linked to the paretent compay and we are carrying on trading, still honouring warranties and supplying parts.

"We're funded, we're trading --- in the meantime we carry on and wait for news from the frozen north."