Swedish car manufacturer Saab, a fully owned subsidiary of General Motors, announced Friday that it will "file for reorganization ... to create a fully independent business entity."
Under the Swedish court system, an independent administrator will be appointed to work closely with the Saab management team to formulate a reorganization proposal, which will be presented to creditors within three weeks of the filing.
Saab said it will continue to operate as usual and in accordance with the formal reorganization process, with the government providing some support during this period.
"We explored and will continue to explore all available options for funding and/or selling Saab and it was determined a formal reorganization would be the best way to create a truly independent entity that is ready for investment," said Jan Ake Jonsson, managing director for Saab Automobile.
"Saab has an excellent foundation for strong growth, assuming we can get the funding to complete engineering, tooling and manage launch costs. Reorganization will give us the time and means that help get these products to market, while minimizing the liquidity impact of Saab on GM."
General Motors said this week that it plans shed tens of thousands of employees, close factories, cut product lines and wants billions of dollars in government funding to stave off bankruptcy.
When all is said and done, GM said that by 2011 it could need a total of $30 billion, which includes the $13.4 billion in Treasury loans it has already received.
In the near term, GM will most certainly need $9.1 billion in additional loans and could require an additional $7.5 billion in the next two years if auto sales don't improve.