The board of the Swedish carmaker Saab, which is owned by General Motors, has filed for reorganisation, seeking protection from its creditors.
The reorganisation process is the Swedish equivalent of going into Chapter 11 bankruptcy in the US.
The announcement follows Thursday’s extraordinary board meeting in which bosses considered the company’s future.
There had been concerns about the loss-making carmaker after the Swedish government rejected GM’s call for aid.
However, a senior government official has said the government has not ruled out providing loan guarantees to Saab.
“It is not the case that we have closed the door to that. That will depend on what the plans look like,” Joran Hagglund, state secretary at the Swedish Industry Ministry, told the Reuters news agency.
Saab filed the reorganisation papers with a district court in south-west Sweden.
Saab managing director Jan Ake Jonsson said in a statement that the reorganisation was “the best way to create a truly independent entity that is ready for investment”.
In a restructuring plan submitted to the US Treasury this week, GM had said it planned to make Saab an independent business by the start of 2010.
Saab has plans to launch three new models over the next year and a half.
“Reorganisation will give us the time and means that help get these products to market while minimising the liquidity impact of Saab on GM,” Mr Jonsson said.
Saab said funding for the restructured company would need to be secured during the three-month reorganisation process and would be sought from both public and private sources.
During that period, the company is not allowed to pay off any debts accumulated before the reorganisation was declared.
Sales at Saab in 2008 were down 25% on the previous year.
The Swedish carmaker has not made a profit since 2001 and last year made an operating loss of 2.19bn Swedish crowns ($248m; £175m), according to regulatory filings.
Source: BBC News