UPDATE 5-Saab seeks breathing space of bankruptcy protection
* Saab units seek court administration to reorganise
* Saab says still seeks funds
* China's Youngman investment will not be approved -paper
* Trade in shares of Swedish Automobile suspended (Adds more quotes)
AMSTERDAM/STOCKHOLM, Sept 7 (Reuters) - Sweden's Saab sought court protection from creditors on Wednesday to avoid being pushed into bankruptcy in a worsening of a crisis which it hopes will be solved by Chinese investment.
Saab's Dutch owner Swedish Automobile, whose shares were suspended in Amsterdam, said court protection would give the 60-year-old company breathing space to come to terms with creditors, get official approvals for the Chinese investments and secure other short-term financing.
"We have to bridge the financial gap. We felt the most orderly and quiet way to do it, bring some peace to this copmany, was to seek the protection of the court and to ensure that nothing can happen to Saab in the meantime," Swedish Automobile's Dutch chief executive, Victor Muller, told a news conference.
The company said in its filing to the court in western Sweden, where Saab is based, that it could not rule out bankruptcy if the creditor protection was not successful.
Muller said Saab owed 150 million euros ($210 million) to suppliers. He said it was the firm's goal to pay its creditors in full.
The court is to announce its decision on whether or not to grant the creditor protection on Thursday at 1200 GMT.
Analysts warned that the company faced grave difficulties.
"Obviously a restructuring is preferable to bankruptcy. But receivership is still a step closer to bankruptcy. We've always warned investors it was extremely risky," said Jan Maarten Slagter, director of the Dutch shareholders' association, VEB.
Saab, rescued from closure by General Motors Co in early 2010 by Amsterdam-listed Spyker Cars -- has had production at its Swedish plant at an almost continuous standstill since April because suppliers refused to provide parts until they received payment. It also failed to pay salaries in August.
In June, Saab said two Chinese car companies, Pangda Automobile Trade Co Ltd and Zhejiang Youngman Lotus Automobil, had agreed to take a combined majority stake in the firm for a total of 245 million euros.
The deals are still awaiting approval from the Chinese authorities -- but the collapse in Swan's share price this year has seen the value of Saab's listed parent plummet from 66.7 million euros, when the China rescue was announced, to Tuesday's closing market cap of 14.8 million euros.
Muller told the news conference, which took place at Saab's plant in Trollhattan, that he was sure the Chinese deals would come through, even though Swedish newspaper Dagens Industri reported that the Chinese authorities were unlikely to approve Youngman.
"We are of the opinion, based on expert advice, that approval will be... timely," he said.
Auto enthusiasts and Saab devotees worldwide are still hoping the firm will survive. Muller said the company had lost a lot of clients' trust, but added: "We are not dead yet."
He also denied a report in Dagens Industri that his relationship with another potential investor, Russian Vladimir Antonov, had turned sour.
"That is a joke... that is total nonsense," he said.
But the Chinese authorities have halted planned investments in the past, such as Saab's failed deal with Hawtai Motor Group in May and Sichuan Tengzhong Heavy Industrial machinery's bid for GM's Hummer, which collapsed in 2010.
Dagens Industri said state-owned Beijing Automotive Industry Holdings Co (BAIC) or sport utility vehicle maker Great Wall Motor, were seen by Chinese officials as being more suitable partners. A source told Reuters in May that Great Wall had been talking with Saab's owner about a possible tie-up.
"At this moment, there is no money and they (Saab) have been waiting for money for more than five months. The problem is still the same -- they need the money," said Tom Muller, analyst at Theodoor Gilissen.
Karl Ask, who heads the Swedish Saab fan club and owns 11 Saab models added: "I hope the Chinese come and help, otherwise I'm not so sure any more about Saab's future.
"Victor Muller is interested in Saab, he loves Saab and that's good. But they need money."
Back in April, Swedish bank Nordea said that if Saab were to go bankrupt, it would have relatively little impact on the Swedish economy, perhaps nicking 0.2 percentage points off the country's GDP.
Muller, a car enthusiast who led Saab's rescue 18 months ago, has scrambled for months to raise funds to cover a monthly wage bill estimated at about $24 million, and other costs.
According to its annual report, Saab paid 1.9 billion crowns ($295 million) in wages, social contributions and pensions for 3,208 employees in 2010. On that basis, it had to pay out about 157 million crowns ($24 million) in staff costs each month last year. Saab now has around 3,640 employees.
"The alternative that we had was a bankruptcy. But that would have meant that it would take much longer for our members to get their money, and the company would in fact go bankrupt," said Darko Davidovic, an official at blue collar union IF Metall which has about 1,500 members at Saab.
"This way our members will get paid much faster, and the company gets another chance to get back on its feet."
Swan said that under the filing for voluntary reorganisation Saab Automobile AB and two subsidiaries were asking the Swedish court to appoint an administrator with whom management would work to reorganise the company.
Saab said it will present the reorganisation plan to creditors within three weeks of filing the reorganisation plan.
Saab entered this same process in 2009 after GM pulled its funding and it exited later that year.
The reorganisation plan aims to lower costs and create a "viable, competitive and independent organisation", Swedish Automobile said.
Saab asked for the court-appointed administrator to be the same lawyer who handled the 2009 Saab reorganisation.
The administrator will apply for a Swedish state wage guarantee scheme to cover Saab's wages, Swedish Automobile said.
Trade in Swedish Automobile's shares has been suspended and the stock will be put on a watch list if Saab's court request is approved, Dutch market authority AFM said in two separate statements. ($1=0.713 Euros=6.429 Swedish Kronas) (Additional reporting by Veronica Ek; Editing by Sara Webb and Mike Nesbit)