Saab Auto Workers' Union Raises Bankruptcy Threat

June 23rd, 2011  |  Source: WSJ

A Swedish labor union Thursday threatened to force car maker Saab into bankruptcy proceedings over workers' unpaid wages.

Union IF Metall said it now is gathering from its members pay slips that haven't been honored in order to prepare requests for payment that will be sent to Saab Automobile. When Saab Automobile receives the requests, likely sometime next week, it will have a week to pay the claims.

"If it does not have the money at that point, there is only one thing left to do," said Berko Davidovic, lawyer at IF Metall.

IF Metall then would have three weeks before it could force Saab Automobile into bankruptcy, he said. The only way Saab's employees can receive money from a state wage fund is if the employer is declared bankrupt.

In the meantime, IF Metall is negotiating for an emergency bank loan to support its members.

Saab Automobile, a unit of Swedish Automobile NV (SWAN.AE), Thursday said it couldn't pay workers' wages because it hasn't secured short-term funding, an indication of the dire state of the company's finances as it tries to finalize agreements with suppliers to resume production and while it waits for regulators to approve a deal with Chinese investors.

Swedish Automobile, formerly Spyker Cars NV, has agreed to sell stakes totalling more than 50% of its shares to Chinese companies Zhejiang Youngman Lotus Automobile Co. Ltd. and Pang Da Automobile Trade Co. Ltd. (601258.SH). Those investments need to be rubber stamped by Swedish and Chinese authorities but consideration will take time.

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