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The end is inevitable for Saab

By FaezClutchless on 20 Dec 2011

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I’ve never read a depressing article about an auto firm until today’s (19/12/2011) announcement of Saab filing for bankruptcy. The Swedish auto company has been standing on its last legs for the past several months. The same company that was one of the first which pioneered automotive technologies such as front-wheel drive and turbocharging has collapsed. This latest development could be the last chapter for the storied Swedish marque.

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The owner of Saab, Swedish Automobiles NV (formerly Spyker Cars NV) has filed for bankruptcy protection in a Swedish court in Vonersborg, Sweden. Saab has been in a state of suspended production since April this year when the company ran out of cash and their creditors soon came knocking. The company then entered into government sanctioned creditor protection and their CEO, Victor Muller has been finding ways to get investors for the company.

Signs of even bigger problems to come happened in June when the company could not afford to pay the salaries of their workers and the company had to undergo a distraint process by a local government debt collection agency, where their property was seized in order to obtain money owed.

Saab did received an $80 million loan from Chinese company Youngman and Muller was negotiating for an $800 million deal with the Bank of China which the bank would assume part ownership of the auto company. But every time a Chinese company or financial institution steps in to offer assistance, General Motors would turn them down.

Although General Motors was the former owner of Saab, they still supply Saab with many parts and technologies. The main reason why General Motors do not want these Chinese auto companies to take over Saab is due to the sharing of technologies that General Motors pioneered to their competitors. You might ask this, “If General Motors was the former owner, why do they have to approve anything?” The reason is because General Motors still hold preferential shares in the company and it is still up to them how this story will go.

Over the weekend (17-18 Dec 2011) Youngman informed the ailing auto firm that they could not continue to fund the company due to General Motor’s actions. This includes any more loans or a complete takeover. Some have accused General Motors of destroying Saab and some have disputed that they were only defending its own interests.

Whatever the reason is, it has left Saab in a really bad spot. Firstly, it has no new potential buyer and it does not have any necessary funds to pay its remaining debts and also to continue its operations with has suspended since April this year.

The Swedish court where the bankruptcy was filed will decide on what will happen next. The restructuring plan by Saab will not be allowed to continue and most definitely the court will declare Saab bankrupt. If that does happen, then the court will appoint someone to oversee the proceedings. The company’s CEO and board members will not have anymore connections with the company and the company’s assets will be liquidated in order to pay back its creditors. The three companies that are affected by this are Saab Automobile AB, Saab Automobile Tools AB and Saab Powertrain AB.

The future of what was once the pride of Sweden and also a Royal Warrant holder for the Swedish royal family is now in jeopardy and what is certain right now that this could be the end of Saab as we know it.

Photo credit: AutoBlog

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Written by FaezClutchless
Some say that his blood is actually RON98 petrol and some say that his right foot weighs over 20kg. But all that we know about Faez is that he loves to drive and is a JDM enthusiast.

  • 1
Dwee Dec 21 2011 04:48 PM
A sad news. I used to like Saab cars. But couldn't afford at that time when I was still schooling.
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