Saab subcontractors ready to accept impairment


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Thursday, 08 September 2011
Subcontractors supplying Saab automobile would likely agree to a remission of debts at a reconstruction of the Saab, according to industry organizations.

"If the alternative is bankruptcy, then I believe they will go along with it," said Sven�ke Berglie, former CEO of subcontracting industry association Automotive Suppliers, FKG.

On Thursday afternoon, news is awaited from V�nersborg court where Saab applied for voluntary reconstruction. The answer awaited is whether Saab Automobile reconstruction application is approved or not.

In the case of a reorganization of the company, Saab is likely to negotiate with subcontractors on a remission of debts.

Two years ago, Saab last went through reorganization. Then, the district court made a so-called arrangement with creditors, which meant that the creditors' debts were written down by 75 percent.

To implement a write-down of debt, it requires that a majority of the voting creditors should agree to it.
How the subcontractors are making themselves available to a write – down this time remains difficult to know, according Sven�ke Berglie.

In the most recent reconstruction, it was carried out by GM, which was the largest creditor, and it had to redeem the creditors' debts to get through the composition.

"The last time GM went in and bought the suppliers' claims at full price. Such a thing I can not imagine going to happen now, "said Sven�ke Berglie.
But he believes nevertheless that the subcontractors can see the benefits of a reorganization.

"The question is what the alternative is. If the alternative is bankruptcy, then I believe they will agree to it. To get 20 percent paid is better than getting 0 percent, which is likely in the case of a bankruptcy, "he says.

Newly appointed manager of the FKG, Frederick Sidahl, told the TT news agency on Wednesday that "everything is better than bankruptcy because then we, end suppliers who are last in line get nothing."

"I've talked with Victor Muller, who says he can find money to pay and pay suppliers and get started with production. It is good if he gets time to do this and I hope the district court consider this from a realistic perspective and that there is really an opportunity, "said Lars Holmqvist of Clepa, an organisation that supplies motor parts to Swedish business daily to Dagens Industri at large suppliers open days in Gothenburg on Wednesday.

Per-Ewe Wendel, president of the subcontractor,  Plastal,  is also in favour of a reconstruction.
"Saab now has two options, bankruptcy or application for reorganization. The latter I think is the better of the two, "he told Dagens Industri on Wednesday.

However, there are those who strongly feel that Saab does not qualify for a reconstruction.

“Had it been a lower public company, it would definitely be a refusal from the courts fro reorganisation. If a reconstruction is granted, there must be reasonable grounds to believe that the reconstruction will succeed,” says Attorney Rolf �bj�rnsson, a bankruptcy expert who also believes that Saab is abusing reconstruction system. He condemns Saab's plans and believes that the District Court in V�nersborg should reject Saab’s application for re organisation.

Also Marie Karlsson Tuula, Associate Professor of Civil Law at the Gothenburg School of Economics, is on the same line as �bj�rnsson.

“It can be about fraud against the creditors when the company took new loans even though there may have been insolvency,” she said to Swedish daily Dagen Nyheter.

For her conditions for reconstruction are not there.
“Saab has obviously no production, they have no cash but a lot of debt. Victor Muller has not submitted any serious proposal for a financial reorganization. Instead, states in its application that its activities should be continued in the same way as before. It is once again waiting for money to come in...and to let the state take care of payroll,” says Marie Karlsson Tuula.

A crucial point is if Saab is able to carry out a reconstruction without incurring new debt. Only mountain of debt to its suppliers is currently at Skr2.2 billion.
Creating of new debt during the reorganization is not an option. These must be paid back before any new debts are built, according to the two who oppose Saab reconstruction.
By Team

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