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Saab Reorganizing In A Bid By GM To Sell The Brand

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By KARL RITTER

The Associated Press

Published: February 21, 2009

STOCKHOLM - General Motors Corp.'s Swedish-based subsidiary Saab went into court protection from creditors Friday so the unit can be spun off or sold by its struggling U.S. parent, officials said.

The move is a last-ditch effort to get Saab in order for sale, but the danger of a collapse still hovers because neither GM nor the Swedish government appears ready to provide enough money to keep it going as a free-standing entity.

An application to reorganize the brand was filed and approved at a district court in Vanersborg, in southwestern Sweden, Saab spokeswoman Margareta Hogstrom said.

GM, which is seeking help from the U.S. government to avoid bankruptcy at home, hopes the three-month reorganization process will make the Swedish brand attractive for a buyer, GM spokesman Chris Preuss said. "We fully intend to be out of Saab by the end of the year," he said.

Preuss said $1 billion was needed to keep the company running, of which GM was ready to pay $400 million. The U.S. automaker had asked the Swedish government to guarantee the rest, but "the guarantees have not materialized," he said. .

The Swedish government, which insists that Saab's survival is GM's responsibility, rejected the request because GM's business plan was not "realistic," Industry Minister Maud Olofsson told The Associated Press on Friday.

The reorganization move gives Saab protection from creditors while it restructures in a process somewhat similar to Chapter 11 bankruptcy in the United States. Under Swedish law, a company that files for reorganization is protected from bankruptcy during the process and cannot pay debt acquired before the filing.

GM said in a statement that Saab would continue operating normally. Detroit-based GM said it would make sure suppliers are paid so they keep shipping.

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