Stockholm-listed Dannemora Mineral AB, the group that restored the Dannemora iron ore mine in the southeast of Sweden back to production to supply the steel industry, said Tuesday it had applied for a Swedish version of Chapter 11 bankruptcy but that output could resume within days.
The company, which has been having financial trouble and struggling to meet interest payments on its debt, said Monday it had ceased production until further notice.
Dannemora said in a statement Tuesday it had filed for what it called "company reconstruction" with the Uppsala District Court in Sweden.
CEO Ralf Norden told Platts by telephone that company reconstruction was a form of legal protection that buys the company time to get its affairs in order.
"Basically it's a Swedish version of Chapter 11. You apply for a standard time of three months in Sweden. Normally the court approves it," he said.
"If you are not successful you can either apply for liquidation or another three months."
Norden said he was confident the company could resolve its problems within three months.
The CEO said he expected the mine to return to production quickly.
"It will be as soon as we can. There are a couple of legal steps we need to take," he said. "It will take us a couple of days [to restore production]."
The company said the reconstruction process was financed by a special reconstruction loan, which was expected to secure the group's funding for the initial three months of the reconstruction process.
"The decision to apply for reconstruction is based on the fact that the company has not reached the necessary financing solution in time, with shortage of liquidity as a consequence,' the company said.
"A reconstruction allows for further discussions with investors about a long-term solution to secure the company's future business."
Earlier this month the company reported a first-quarter net loss of SEK84.8 million ($13 million), compared with a net loss of SEK133.9 for in Q1 2013.
It said demand for its products was staying strong and output was 755,000 mt, up 34% year on year.
