By Mike Stetzer
Swedish automaker Saab has submitted a bankruptcy petition to Sweden's bankruptcy court and had it rejected, according to BBC News.
Now, a Swedish appeals court has given Saab the right to appeal the bankruptcy court's decision that it did not have enough liquidity to seek protection from creditors.
Meanwhile, Swedish unions, which represent Saab employees, requested that the company be declared bankrupt so that they might collect their salaries.
Apparently, Saab has still not yet distributed workers' August paychecks. Swedish bankruptcy court works something like Chapter 11 bankruptcy in the U.S.: companies get a chance to reorganize in an effort to remain in business. In Sweden, though, the government may take on the burden of employees' salaries during a bankruptcy.
If a company is forced into bankruptcy, the government offers a salary guarantee that keeps workers from losing all their income when their employer hits hard financial problems.
Swedish union members may attempt to force a company into bankruptcy if it is unlikely that they can collect their salaries any other way.
Forced bankruptcy is possible in the U.S. as well, though it is not regulated through unions. In U.S. bankruptcy courts, a person's or company's creditors must agree to petition the court for a forced bankruptcy filing. They can only do this if the person meets certain debt levels. The court can only grant the forced bankruptcy if the creditors are unlikely to be paid without the filing.
General Motors (GM) acquired Saab in 1990 but sold it to Spyker Cars (now called Swedish Automobile) in 2010, while it went through its own bankruptcy. Since then, Saab has reportedly struggled with falling sales and had to cease production in April of this year.
Swedish Automobile officials announced several months ago that two Chinese auto firms would buy stakes in Saab, but that deal may not come to fruition. At present, neither the Swedish nor the Chinese government has approved the deal. Approval is also needed from the European Investment Bank.
If the Chinese investment pans out, the Chinese cash infusion could total $344 million (from Zhejiang Youngman Lotus Automobile and Pang Da Automobile); at this stage, though, analysts are not sure whether either government will give the green light.