Tampa Bankruptcy Blog » Workers Unions

Saab Succeeds in Appeal Against Bankruptcy

dmishesq — Fri, 23 Sep 2011 14:06:04 +0000

Swedish car manufacturer, Saab was at the brink of involvency when a last minute appeal to the court granted them a stay. The appeals court overturned an earlier court ruling and gave Saab time to reorganize their finances and secure additional funds. The judgment also protects the Swedish car maker from creditors.

Saab’s financial woes began when GM sold it off last year. The 60-year old auto maker could not carry on production when suppliers stopped supplying parts because they were not paid. The debt Saab owes its suppliers comes up to about 150 million euros ($205 million). The assembly lines in its main factory in Trollhaettan have been completely idle since June.

The workers unions have also begun taking legal action over non-payment of salaries to its members. In August, after workers were not paid for the third consecutive month, workers unions attempted to force the company into bankruptcy to initiate a state-funded program to pay for workers’ salaries. However, the action failed. Nevertheless, the union did succeed in getting the workers paid because creditor protection also activates the state wage-guarantee scheme.

In a statement, the IF Metall trade union said that Saab and its employees will now receive “much-needed breathing space to systematically develop a long-term business plan.”

When GM sold Saab, it was bought over by the Dutch group, Spyker which later changed its name to Swedish Automobile. But that did not bring an end to Saab’s problems. The auto maker was still short of cash and has been trying to raise money ever since. It now hopes for a fresh capital injection from Chinese investors.

In the meantime, an application to the Chinese authorities has been made and Saab is hoping authorities in China will approve a 245 million euro ($336 million) investment by Zhejiang Youngman Lotus Automobile and Pang Da Automobile Trade Co, which should be forthcoming by November. A bridging loan amounting to 70 million euros is also on the cards from Zhejiang Youngman.

Saab’s fortunes appear to now hinge on the prospect of the Chinese investors, something that has been quite commonplace among many other companies these days.

Related Blogs

How Effective are State Bankruptcies?

dmishesq — Mon, 17 Jan 2011 16:12:07 +0000

At present it is not possible for states to file for bankruptcy protection as it is against the law. But this may change if a group of conservative lawmakers have their way in Washington. There is an initiative to get Congress to amend the law and permit states to file for bankruptcy. At present, about half of the municipalities in the states are allowed to do so.

Those who propose the idea say states with huge budget deficits like California would welcome it. These states are facing massive unfunded healthcare and employee benefit hence when they are allowed to file for bankruptcy, it would permit them to have all their deficits laid out and a systematic plan for recovery plotted out.

One strong advocate for state bankruptcy is Americans for Tax Reforms (ATR). The group lobbies for pensions and healthcare benefits to be curtailed upon bankruptcy of the state. But they are heavily opposed by the workers’ unions, for obvious reasons. Some unions see the ATR agenda as targeting the unions in their biggest representation, the government. Some 37% of government employees are members of unions whereas only slightly more than 7% of private sector workers are.

The American Federation of State, County and Municipal Employees are of the opinion that the ATR and groups like them are pushing for the right of states to file for bankruptcy as a means of reneging on their collective-bargaining agreements.

On the other hand, former House Speaker and potential Republican presidential candidate Newt Gingrich favors the right for states to file for bankruptcy because it is a means to get state governments not to go to the federal government for financial aid. Gingrich singled out California, Illinois and New York as three states most likely to ask for a bailout.

But as the debate rages on, investors are already scurrying away from financial markets. In November last year, the bond market experienced a rise in interest rates in long-term bonds and a rapid rise in new bond issuances by various states and municipalities. A second blow came when investors’ concern over deteriorating state and local government budgets and the talk that some borrowers could back down on their debts sent municipal bond prices tumbling recently. When Wall Street banking analyst Meredith Whitney went on national television to predict a rise in municipal bond defaults, the market got really frightened.

Against this backdrop, proponents of state bankruptcy are driving investors further away.

Are you considering the bankruptcy option for yourself or your business? Call us at (813) 200-4133 for a free discussion.

Related Blogs

Greece Ready to accept EU-IMF Plan

dmishesq — Thu, 29 Jul 2010 17:37:00 +0000

Two recent opinion polls showed that most Greeks agree that the country’s government has to adopt the austerity measures imposed by the European Union (EU) and International Monetary Fund (IMF) in exchange for bailout funds to avoid national bankruptcy.

The Greek government coffers have no money to meet its obligations largely due to endemic corruption, cumbersome bureaucracy and government largesse. The country is only one week away from defaulting on bonds worth €8.5 billion maturing May 19 for which it does not have the money to pay. Despite widespread violent protests last Wednesday, a majority of the people have begun to realize that they have to bite the bullet if their country is to survive.

In a poll conducted by the Proto Thema newspaper, 54.2% of respondents say they are willing to go along with the austerity measures imposed by the EU-IMF plan rather than see their country go bankrupt. On the other hand, 33.2% of those who responded to the poll feel the government should not accede to getting outside help but should rather go it alone. The poll also shows that 51.4% of the public are reasonable enough to accept that more personal sacrifices have to be made to overcome the economic crisis while only 28% believe that having strikes will solve the problem.

Another poll was conducted by the Sunday edition of the To Vima newspaper. This poll showed similar results in more than half of Greeks (55.2%) feeling that the EU-IMF austerity measures are necessary and they will ‘accept’ or ‘probably accept’ them. 44.6% of respondents in this poll do not accept the EU-IMF conditions. However in contrast to the other poll by Proto Thema, this poll discovered 53.2% of Greeks feel that strikes and protests should continue. However, 63.5% of these respondents do not think that the protests would stop the government from adopting the austerity measures.

In the Proto Thema poll, 1,000 people were asked if they thought the Greek workers unions keep their protests at a ‘rational’ level. A whopping 74% said yes while only 21% replied in the negative. This poll was conducted on behalf of the newspaper by Alco polling agency on May 5 to 7 through telephone calls after violence in Athens by protestors resulted in the deaths of 4 bank employees whose building was set on fire.

On what they thought of their political leaders, the poll showed that 49.4% of the people felt that Prime Minister George Papandreaou has been ‘responsible’ in his job while 39.9% said he was not. In a related result from the other poll by the To Vima newspaper, 71.3% of Greeks think the country’s major political parties should cooperate more to tackle the crisis.

The To Vima survey was conducted by the Kapa Research polling agency interviewing 1,030 respondents on May 6.

Related Blogs

Greece Ready to accept EU-IMF Plan

dmishesq — Sat, 22 May 2010 16:14:39 +0000

The To Vima survey was conducted by the Kapa Research polling agency interviewing 1,030 respondents on May 6.