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SAAB CASH CRISIS
Swedish court rejects Saab restructuring

Swedish court rejects Saab restructuring

Published: 08 Sep 2011 14:04 GMT+02:00
Updated: 08 Sep 2011 16:31 GMT+02:00

Vänersborg district court in western Sweden has rejected beleaguered carmaker Saab Automobile's applications for restructuring. Chairperson and CEO Victor Muller responded by declaring the firm's intention to appeal

The court ruled that the requirements of law had not been met and thus could not approve the application.

Judge Gunnar Krantz read out the district court's decision:

"The court has concluded that there is not enough reason to believe that a company reorganisation would be successful. The company's request is therefore rejected," he said.

Saab has until September 29th to appeal against the ruling and chairperson and CEO Victor Muller said after the decision that the company "is not dead yet" and outlined plans to appeal.

Saab's biggest union, IF Metall, said it "lamented" the decision, after having said on Wednesday that bankruptcy protection "could be a good solution."

The company is now at the mercy of its creditors.

"If the company doesn't find another solution, or if it doesn't declare bankruptcy itself, we may have to do it ourselves in the coming days," IF Metall chairman Stefan Löfven said in a statement.

Around 950 of the 1,000 members of white collar union Unionen now stand behind a bankruptcy petition, according to union lawyer Martin Wästfelt.

"We have a massive support from our members to act," she said.

In early 2010, Saab was saved from bankruptcy by Dutch group Swedish Automobile, then called Spyker, which bought the brand from US car giant General Motors.

Swedish Automobile had said it is eagerly waiting for some €245 million in funding from Chinese partners Pang Da and Youngman to arrive.

Muller said Wednesday he was "very confident" the Chinese funds would come through and said the reorganisation request was especially aimed at allowing the company to find funding to hold it over until Chinese investments arrive.

Production at the company's sole plant in Trollhaetten, in southwestern Sweden, has been halted entirely since June.

With no cash and stagnant sales, Saab, which employs 3,700 people, has stopped paying its suppliers and they have in turn halted deliveries since April.

Salaries have not yet been paid for August.

Meanwhile, the company has faced criticism for padding the pockets of Swedish Automobile's management team, including handing Dutch chairman of the board Hans Hugenholtz a 633-percent raise in May.

The company owes about 150 million euros ($210 million) to its suppliers, according to Muller.

Asked by Swedish news agency TT whether Thursday's decision spelled the demise of Saab, Energy Minister Maud Olofsson replied: "No, you can't say that."

"It's clear that Saab is in a very precarious situation but it has been for quite some time. What the unions do now will be decisive. It's of great concern that the employees have not received their wages," she said.

TT/AFP/The Local (news@thelocal.se)

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Your comments about this article

16:35 September 8, 2011 by Great Scott
Is the ship now finally going to sink? If so what are the government plans for the 12 to 15,000 that will face unemployment. Or more likely the case does the clueless government have any ideas.

Its a sad day.
18:03 September 8, 2011 by eltechno
This is a sad day for me. I drove Saabs for most of my adult life--my 1985 900S went over 296,000 miles (476,000 km) and was running just fine when it died in a massive hailstorm with stones the size of tennis balls. Best bad-road / snow car I have ever driven and that includes many with AWD.

These days, I drive a Lexus that is so insanely well-built it makes my old Saab look like something banged together with hammers. And that's Saab's problem. When I bought my first 99 in 1974, it was easily the innovative car on the market—sweet-handling, fold-down rear seats, well-thought-out front-wheel drive, etc. Now everyone sells this car and many of them are much better built, more reliable, with more dealers—and almost all of them are cheaper.

So now the good citizens of Trollhatten are to be rewarded for actually perfecting the original Camry / Altima / Passat / Sonata by wondering what happened to their company and their lives. Does NOT seem fair!
18:54 September 8, 2011 by Rick Methven
Unfortunately, the writing has been on the wall for some time now that the demise of SAAB cars is only a matter of when not if.

This lead me to buy the first non SAAB car in 35 years but I still will keep my 9-5 Aero until it falls apart which hopefully will be a long way off.

Drivers of most car manufacturers have SAAB to thank for a list of innovations that SAAB made to safety and functionality, that have been copied by others.

Read about these SAAB innovations

http://www.saabsunited.com/2005/12/saab-innovations.html
23:20 September 8, 2011 by jack sprat
The final nail in the Saab coffin was the takeover by Spyker and it's dubious associates.

Spyker itself was already deep in debt and virtually bankrupt, in even worse shape than Saab, never ever having made a single years profit since it began.

It was crazy for anyone to believe that these dodgy characters had got involved for any reason other than to strip the carcase bare and get their grubby hands on any possible free handouts.

As far as Sweden's concerned it's all over bar the fat lady singing, however it will be interesting to see if the brand name is eventually resurrected in some far off corner of China or Russia.
00:55 September 9, 2011 by Just_Kidding
If Chinese were serious about buying and supplying cash, they would have supplied it before starving the company for cash, and letting costumers loose their trust on the brand. I guess few Chinese rookies from Chinese companies are jetting between Sweden and China and meeting Muller in expensive hotel suits, while they don't have any serious support of the big fellas in their companies.
07:32 September 9, 2011 by Vietvet
@jack sprat

When it comes to Saab, the "fat lady" has sung, left the building and is now retired living on her pension. It is sad to see this, but more than anything I feel for the employees. It's tough being unemployed in Sweden. The government helps the unemployed here even less than they helped Saab.
01:21 September 10, 2011 by repat_xpat
@ jack sprat

I think you hit the nail on the head regarding the SAAB "investors."

While my experience at SAAB shows why GM dumped them, correcting work ethic issues could not save SAAB now. There is no way a car company can afford automobile engineering with just 100K cars per year (or less). Opinion on why SAAB failed under GM is irrelevant, now it is simple mathematics. Muler and the Russian mob knew this before they bought them; they had a different motive.

@Vietvet: I'm with you. The people who worked at SAAB are the real victims.
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