Saab lives, government protection granted
Saab first filed for government protection earlier this month but that request was denied by a District Court in Vänersborg, Sweden with the court stating that they didn’t believe that protection and corporate reorganization would work in the effort of procuring a long life for the company. However, after being granted the right to appeal that initial decision, Saab has received the much needed lifeline from the Court of Appeal in Gothenburg, Sweden which will grant them protection from their creditors and unpaid employees from court-forced bankruptcy for at least three months. Also, while Saab will have the next three months to come up with a proper plan of attack to pay back their many suppliers in order to resume production, the Swedish government will assist in paying the workers so this decision should also please the three labor unions who already requested Saab to be forced into bankruptcy.
Now that Saab and parent company Swedish Automobiles have been granted government protection from the creditors, they have three months to essentially put on paper how they will pay everyone who is owed money while also showing how they plan to proceed with normal operations in a way that they won’t just end up right back in the same spot. Should they show strong progress, the Swedish government can extend that protection period so that creditors cannot claim the assets that the company does have – while the government will also continue assisting in the payment of employee wages. Based on this fact, Saab has requested that the bankruptcy filings made by two white collar unions and blue collar union IF Metall be dropped.
This is incredibly good news for Saab and there is a good chance that company head Victor Muller will have his first good night’s sleep in many months as the automaker can now focus on how to fix the problem as opposed to spending their time fending on claims on their assets. Saab still allegedly owes over $200 million to suppliers along with other various creditors and paying off those folks will be the first major hurdle because these are the companies who provide the materials with which Saab builds vehicles. Once the suppliers are paid off and production can commence, Saab can get back down to the business of making money via car sales rather than depending on selling off portions of the company to stay alive.
The money needed to pay off the suppliers and restart production is expected to come from two very lucrative investment deals with Chinese firms Pang Da and Youngman Lotus. These partnerships wee inked months ago but they are both subject to approval by the Chinese government –which has stepped in on similar deals in the past and put a stop to them. Some believe that the deals with Pang Da and Youngman will not be approved by the Chinese government but now that Saab has received the government protection that they so desperately needed, perhaps the Chinese leaders will be more accepting of this partnership. Saab management fully expects that the Chinese investment deals will be approved and at that point, things will look a whole lot brighter for the future of Saab. Unfortunately, there is no real deadline for when the Chinese government will approve the deals or if they will approve them at all. Should Pang Da and Youngman not be permitted to buy their way into Saab, the Swedish automaker may have to scramble to show that they can survive without the Chinese money.
Other Saab News:
A third Swedish labor union demanding Saab bankruptcy
Saab gets a glimmer of hope from the Swedish government
Saab to face first bankruptcy hearing on September 26th
Saab’s request for government protection denied – bankruptcy appears imminent
Swedish debt authority prepares to seize Saab assets