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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