Saab files for court protection while it awaits Chinese cash From The New York TimesSeptember 08, 2011 The New York Times (Paris) - Swedish carmaker Saab, awaiting investments from companies in China, sought court protection from creditors on Wednesday, heading off a legal challenge from unions that could have forced the breakup of the company. Saab Automobile and two subsidiaries, Saab Automobile Powertrain and Saab Automobile Tools, filed for "voluntary reorganization" with the District Court in Vanersborg, Sweden, according to a statement from Saab's parent company, Swedish Automobile, which is based in Zeewolde, Netherlands. Overseas units are not affected by the filing. The companies "are of the opinion that, considering Saab Automobile's current limited financial resources, a voluntary reorganization will entail the best preconditions for using existing resources in the most efficient way," the statement said. Faced with uncertain prospects for recovery, Saab's employees are growing increasingly anxious. They have not been paid for August, and were paid late for both June and July. Unions have been considering a legal challenge that could have led the company into bankruptcy. As part of the three-month reorganization plan, Saab's court-appointed administrator will ask the Swedish government to guarantee that all Saab Automobile employees be paid, though the company will have to repay the state. The company also said it hoped to gain the support of creditors for its plan, as it is aiming to fully reimburse them. Unions said the company's maneuver would forestall their legal action. "The decision to seek reorganization can be a positive solution for Saab," Stefan Lofven, an IF Metall union spokesman, said in a statement. He called on the court to deal swiftly with the company's application "so union members can get a quick decision on whether they will be paid under the state guarantee." Saab has signed what it called "binding agreements" with two Chinese partners this year, but said it had not yet received any of the promised investments. Zhejiang Youngman Lotus Automobile agreed in June to pay 136 million euros ($191 million) for a 29.9 percent stake in Swedish Automobile. Pang Da Automobile Trade said in May that it would pay 109 million euros for 24 percent of Swedish Automobile. Saab said that the Chinese deals remained "subject to obtaining certain approvals." It did not elaborate, but Chinese companies investing abroad must first obtain the approval of China's National Development and Reform Commission, something that has not yet been forthcoming. A previous deal with another Chinese company, Hawtai Motor, foundered after it was denied approval. Both Chinese companies support the filing, Victor Muller, chief executive of both Saab and the parent company, said in the statement. "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 financing to be obtained and an orderly restart of production to be prepared," Mr. Muller said. A spokeswoman for the company, Gunilla Gustavs, declined to comment on the amount of bridge financing required. She stressed that Saab was not seeking to shed debt in the reorganization, and remains a going concern.