Saab bankruptcy filing: Latest sob story for troubled car firm

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A Saab car

The parent company of Saab has filed for bankruptcy protection, in a bid to save the floundering iconic auto brand. Image from Wikimedia Commons.

Saab, the iconic Swedish auto maker, seems to be facing one sob story after another. The troubled auto firm recently filed for bankruptcy protection, as the auto firm needs to reorganize itself and shed debt to return to viability.

New chapter in sordid Saab saga

In 2009, General Motors announced that it would be divesting the Saab brand from its corporate umbrella. Under-performing brands under the GM banner were left to fend for themselves. Saab was purchased in 2010, according to USA Today, by Spyker Cars, which later re-branded itself as Swedish Automobile. The company has been struggling to keep the Saab brand afloat. In a last-ditch effort to save the iconic car brand, Swedish Automobile has filed for bankruptcy protection. The company is asking a Swedish court to allow a “self-managed” reorganization. According to The Telegraph, the reorganization plan currently has to be approved by creditors that are owed outstanding debts and the Vanersborg district court.

Deeply troubled firm seeking investors

The reason Swedish Automobile is filing for a 90-day reorganization is so fresh cash can be sought from investors. At the Trollhattan factory, according to Reuters, Saab began scaling back production in April. Parts manufacturers refused to supply the company anymore, until they had received payment. The company also stopped being able to make payroll in August; Saab’s 3,700 employees haven’t been receiving their salaries since then. According to the New York Times, all production at the Trollhattan plant shut down in June, and workers’ unions are considering lawsuits against Swedish Automobile. The company owes at least 150 million euros ($210 million). Earlier this year, Russian investor Vladimir Antonov was willing to invest up to 100 million euros, according to the Telegraph, but the investment was quashed by the European Investment Bank. Two Chinese automotive conglomerates are currently willing to invest up to 245 million euros in the company. Swedish and Saab chief executive Victor Muller said investors Pang Da Automotive Trade group and Zhejiang Youngman Lotus Automobile (unrelated to English sport car maker Lotus) approved the restructuring before they cut checks. Investments from the two companies still require regulatory approval.

Saab getting bailout

The Swedish National Debt Office, according to the Telegraph, has extended Saab a guaranteed 280 million euro loan from the European Investment Bank. Saab, according to Bloomberg, sold 31,696 cars last year and fell short of the company’s goal of 50,000 to 60,000 units. Sales peaked for the brand in 2006, when Saab sold 133,000 cars worldwide. According to the New York Times, American Saab dealerships and service locations aren’t affected by the bankruptcy. Saab dealerships and customers in the U.S. and Europe can still get loans through Ally Financial, according to Bloomberg. Ally, formerly General Motors Acceptance Corp, or GMAC, is the former financial wing of General Motors and Saab’s chief financial partner in the U.S. and European markets.

Sources

USA Today

The Telegraph

Reuters

New York Times

Bloomberg


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