Saab facing bankruptcy over unpaid workers

Union leaders at Saab, the Swedish automaker unable to pay its workers, are threatening to push the company into bankruptcy with legal action.

Bankruptcy would likely put an end to the iconic brand, founded in 1937.

The automaker, publicly traded in Sweden (SWAN.AE), halted production this week due to a severe cash shortage. Saab cannot pay wages to hourly employees because the company doesn't have short-term funding sources to make payroll.

A Swedish analyst told Bloomberg Saab's chances are slim of making payroll, much less survival. The company is not able to produce cars, said Martin Crum, with Amsterdams Effectenkantoor BV. That's the main concern. If you don't sell cars, you don't get cash in.

Saab was previously owned by the U.S.'s General Motors, but the company sold the Swedish automaker in 2010 to Spyker Cars NV when it was restructuring from financial troubles. Spyker Cars NV is now Swedish Automobile NV, the owner of Saab facing insolvency over unpaid bills and interrupted production.

Saab has had cash flow problems since GM sold off the brand and the company's because of missed sales targets and the company's cash flow problems caused manufacturing lines to be shut down in April over payment disputes with company suppliers. Among the roughly 800 suppliers Saab works with the company is estimated to owe $47 million.

The immediate problem is paying the workers and satisfying the worker's union, however. Union IF Metall says it is gathering pay stubbs from members that haven't been honored by the company to prepare proper documents for presentation. Saab is expected to receive the claims within the week and if they aren't satisfied then the union may take formal action, forcing Saab into bankruptcy and ultimately into its demise.

Saab spokeswoman Gunilla Gustavs was unsure when or if the unpaid wages would be honored by the company. That depends on when and if we can secure short-term funding..., she said. This is really bad news and we are working intensely to do something about it. There are no guarantees but we are not giving up.