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Saab automobile’s Bankruptcy might not wipe out the company but restructure it


  

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Friday, 26 August 2011
Saab automobile is having it really hard to meet its operational expenses such as paying its employees and suppliers, but this company seem to have an underlying secret. It continues to keep up itself and not falling into bankruptcy.

If a company is insolvent, it is against the Swedish law for it to continue running the businesses if it means the company are wasting money for nothing. This can lead to the person responsible, in this case, CEO, Victor Muller; be sentenced to prison for not exceeding two years for negligence against the creditors.

“A prosecutor should look at it,” said attorney Hans Elliot at the law firm Glimstedt in Lund, southern Sweden who has a long experience as an insolvency practitioner and author of a book on bankruptcy.

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However, it is hard to know how long such a situation can last before it becomes a crime given that other factors are to be looked into differently. The fact that Saab does not pay its debts in itself is not punishable, according to bankruptcy officials.

But the question is whether Saab is given special treatment for one creditor over another, and pay in the wrong order. It could be a case of fraud against creditors and illegal promotion of creditors.
A bankruptcy however, need not mean that Saab would be obliterated, emphasizes Hans Elliot.
“Bankruptcy is an excellent reconstruction option. But it requires that someone is found interested to buy the business and continue to build cars. Then it's worth a lot. But if part is sold and Stena Metall gets there and gets stuff melted down, we must not expect to see much, he says.

Saab according to various sources, preparing an application for reconstruction, reports radio Sweden. As late as 2009 the company went through a reorganization in which billions of debts were written off. But the company is reported to have rejected the information.

“We have not taken any decision to apply for reorganization,” said Mats F�gerhag, head of technical development and part of corporate management.

“It's not something we are working on now. If the issue will come into play later, it is something I cannot say now. Nothing can be ruled out, but it's not that we're doing a reconstruction application right now. That I can say for sure,” says Mats F�gerhag.

The information on the reorganization forced Swedish Automobile (Swan) to send a press release on Friday afternoon.
There it neither confirmed nor denied that the company is developing a restructuring plans.
"To secure Saab Automobile’s survival, Swan and Saab Automobile want to evaluate all the options available," reads the press release.

The Company confirms previous statements that it is in discussion with several parties to secure the short and medium funding to restart and maintain production.
By scancomark.se Team


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