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GM unit Saab files for protection from creditors

February 21, 2009|Associated Press

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

The move is a last-ditch effort to get Saab in shape for sale, but the ailing brand is still in danger of collapse 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 at a district court in Vanersborg, in southwestern Sweden, Saab spokeswoman Margareta Hogstrom said. It was approved later Friday.

GM, which is seeking help from the U.S. government to avoid filing for bankruptcy protection at home, hopes the three-month reorganization process will put the Swedish brand into shape for a sale, 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 Saab running, of which GM was ready to pay $400 million. The U.S. automaker has 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 wasn't realistic, Industry Minister Maud Olofsson said.

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