GM had asked Sweden for government help for Saab but had to take 'no' for an answer.
With no help forthcoming from Sweden's government, Saab has filed for bankruptcy protection. The goal is to split from its parent company, General Motors. GM says its exploring all options.
General Motors' subsidiary has filed for reorganization, a step taken to stave off bankruptcy protection.
General Motors' Swedish subsidiary, Saab, confirmed on Friday that it has filed for reorganization, a step to avoid bankruptcy protection, as the company seeks to pay down pending debt and return to profitability.
"I can confirm that Saab has filed for reorganization. It is not a bankruptcy situation. The aim is to have Saab as a freestanding entity," a spokesman for the firm told Forbes.
SAAB is seeking funds from both public and private sources but will operate as usual with government funding during the reorganization process.
Under Swedish law, when a company files for reorganization, it means that it is looking for ways to raise capital to pay off debt. One of the solutions a company might consider is seeking a buyer to could acquire an equity stake.
The legal process will be headed by an independent administrator appointed by court as the company seeks funds from both private and public sources, TradeTheNews.com reported. Saab will operate as usual, with the central government providing assistance during the process, which will be executed over a 90-day period.
The Swedish government has categorically denied the possibility of buying equity in its struggling carmakers. "The Swedish state and taxpayers in Sweden will not own car factories," Industry Minister Maud Olofsson said on Wednesday. "Sometimes you get the feeling that [GM] is a small, small company, but it is the world's biggest automaker, so we have a right to make demands."
Saab builds fewer than 1 million vehicles per year, in contrast to Renault or Volkswagen, whose capacity ranges between 2 million and 3 million cars per year.
