#bankruptcy

That’s not us making the prediction. Stockholm News says that “Saab’s fate could be decided on Tuesday.” On Monday, the Court of Appeals will meet and will deliberate whether Saab will be allowed to appeal the District Court’s denial of a reconstruction.

Stockholm News does not expect a decision until Tuesday. But it predicts:

The white-collar unions Unionen and Ledarna filed bankruptcy petitions today against Saab, everybody from Associated Press to inside.saab reports. On the same day, Saab announced that it had licensed its PhoeniX architecture to China’s Youngman at firesale prices – a move that could possibly buy another month or two. But first things first:

As if Victor Muller doesn’t have enough problems. He has managed to upset Sweden’s state collection agency Kronofogden so much that they are threatening arrest. Muller claimed there is enough money to pay the employees, but if he does that, the state collection agency will get its hands on the money. The collection agency says that Muller has to hand over the cash or go to jail. This quote by Victor Muller sent Hans Ryberg, head of the enforcement agency in Uddevalla to the ceiling:

This was the headline many Saab aficionados were looking for (and we have the emails to prove it.) On Saab’s darkest day, we might as well put a smile on the faces of Saab’s most militant missionaries – even if the smile lasts only a few seconds.

Two days ago, Saab filed for court protection – the Swedish variant of Chapter 11. That must be approved by the court – and today, the court denied it. Says the Wall Street Journal:

Yesterday, Sweden’s Dagens Industri reported that Saab would seek court protection today. We did not report it, because honestly, we are tired of the story. On the other hand, there were signs that things are heading to the court: Saabsunited tried its hand again on amateur spin and wrote that bankruptcy, should it happen, wouldn’t be all that bad: “It does NOT mean that SAAB is in any way dead tomorrow!” Glad this is cleared up.

This morning, employees of Saab were woken from sleep (they’ve become used to sleeping in since April) and called for an all hands meeting at 12 noon. At the meeting, they heard:

Bloomberg [via the Financial Post] reports that “one of the five biggest European banks” is “close” to loaning Saab $157m so that it may pay workers and suppliers, in order to move towards restarting production. According to DI.se, the deal is predicated on Saab securitizing the loan with shares of Saab Great Britain or other “alternative assets.” But apparently whatever the banks ask for, Saab will try to give, as Theodoor Gilissen Bankiers analyst Tom Muller explains

They need the money immediately. I hope they solve it this week, otherwise I think it’s over for Saab. It’s a very dire situation.

He’s not kidding…

Swedish radio cites an unnamed source close to Saab as saying the troubled automaker was preparing to file for court-protected reorganization, as it struggles to pay workers and restart production. Under that scenario, Sweden would pay worker salaries while reorganization takes place. But at the company’s official mouthpiece, inside.saab.com, a press release refuses to deny or rule out that Saab has chosen this route. The release reads:

Swedish Automobile N.V. (Swan) is aware of certain reports in Swedish media related to a possible filing by Saab Automobile AB (Saab Automobile) for a voluntary reorganization under Swedish law.

Swan confirms its earlier announcements that it is in discussions with several parties to secure the short and medium term funding of Saab Automobile to restart and sustain production. In order to secure the continuity of Saab Automobile, Swan and Saab Automobile are evaluating all available options. Swan will update the market in case of new developments.

This non-denial might be read as a confirmation that Saab is considering filing for court protection, but hasn’t yet decided on that course of action. Meanwhile, Saab has delayed its latest financial report, and its online PR rep continues to blame the media for concluding that because Saab can’t sell cars, pay suppliers, restart production or even pay salaries on time it’s destined for bankruptcy court.

Saab has already warned its workers that paychecks due tomorrow could be delayed until “committed” funds from investors arrive, but Bloomberg reports that the warning may not be enough. According to the report

Any delay in the August payments will prompt the unions immediately to start a process aimed at ensuring state coverage of wages in the event of the carmaker’s failure, officials from the IF Metall and Unionen labor groups said. The unions, after gaining employees’ backing, would first file payment requests with Saab. If salaries remain unpaid in seven days, the unions may then ask a district court to declare Saab bankrupt.

That could put Saab into bankruptcy in as little as two weeks. Saab’s long nightmare seems to be drawing to a close.

Portland’s 82nd Avenue is one of those streets that exists in nearly every American city. Unofficially demarcating Portland proper (“the right side of the tracks”) from the extensive working-class suburbs that bleed into Gresham (“the wrong side of the tracks”), “Shady-Second” is home to a vast strip of wall-to-wall buy-here-pay-here lots, used-car hustlers, and small repair shops that line both sides of the road from Sandy Boulevard all the way down to Division. Like every other used-car strip in every other town in America, it’s where folks go when they need a car and don’t have much money to spend. Unlike most other low-cost car Meccas, however, 82nd Avenue is also home to Oregon’s last remaining Saab dealership. And it’s something of a symbol of the hell that Saab dealers are going through right now.

I know I’ve said this several times before, but the end really is near for Saab. The WSJ [sub] reports that Sweden’s Debt Enforcement Agency began auditing Saab’s finances after several debts came due earlier this week, and found only 5.1 Kroner ($796,291) in its Skandinaviska Enskilda Banken account. That’s barely enough to cover the 5.06m Kroner in debts that came due this week alone… and Saab’s total outstanding debt is ten times that amount, around 50m Kroner. And as if the financial trouble weren’t dire enough, key stakeholders are abandoning Saab in embarrassment, like Benny Holmgren, one of Sweden’s largest car dealers. Holmgren tells SvD.se that his contract to sell Saabs has expired and that he won’t renew, explaining

“For me, it is important to be proud of the brands that we have in our halls. Saab does not deliver cars they promised, they do not pay wages to their employees, nor debts to their suppliers while the owners pick out big money. It does not feel right for a [my] car dealers.”

But among the hardcore Saab faithful, today is not a day of sorrowful resignation… but a day of totally overblown and unrealistic hope for their dying brand. Yes, really…

With debt collectors closing in on all sides, Saab’s shaky PR took another hit today as the Swedish media repotred that members of the board of Swedish Automobile (SWAN), Saab’s parent company, received pay increases of some 633 percent over 2010. Thelocal.se reports that

New chairman of the board, Hans Hugenholtz, received a raise of 633 percent, from 147,150 kronor (about $23k) to 611,163 kronor (about $950k). Others also had their pay increased significantly.

Though the amounts are relatively small, and the dwindling ranks of unquestioning Saab supporters argue that the compensation is low compared to the Dutch average (SWAN is incorporated in The Netherlands), this is just the latest PR disaster to hit the struggling automaker. One Saab employee sums up the mood:

It feels like everyone is out to grab what they can get.

And no wonder they feel that way. Not only did worker paychecks arrive late, but Sweden’s national debt office has begun foreclosing on the first of its outstanding claims… and the initial amount (about $58k) could have been covered by the chairman’s pay increase alone. Sending the message that board compensation is more important than staying out of insolvency has to be some of the worst PR imaginable. Still, some will defend Saab no matter what…

Bloomberg BusinessWeek reports that Saab has to pay some $620,000 today in order to keep Sweden’s Debt Enforcement Agency at bay. Should Saab fail to pay suppliers Kongsberg Automotive and Infotiv within the next 24 hours, Swedish Debt Enforcement Agency officials say

The collection process that may start tomorrow would include investigating Saab’s bank accounts and potentially also other assets.

Assets will be frozen while Saab’s worth is assessed, a move that would essentially end the existence of Saab as it currently (barely) exists. Saab spokesman Eric Geers says

We’re of course totally aware of this situation with the collection agency, but I can’t comment on what we’re going to do,

but other than pulling out from the Frankfurt auto show in order to focus funds on restarting production and selling another tranche of value-diluting shares, Saab hasn’t done much to respond to the latest crisis. And with another $795m due to suppliers in “about a week,” time is slipping away. Luckily for the True Believers, there’s still a shred of hope-against-hope to hang on to, as Saab’s PR man Steve Wade says something called “The Deal” is in the works.

Just three weeks after Saab narrowly avoided being pushed into bankruptcy by supplier SwePart, SvD.se reports that three other suppliers have now initiated the bankruptcy process by requesting that Sweden’s national debt bailiffs pursue their debts. One Spanish supplier is reported to be foreclosing on €2m ($2.8m in debt), while two of the rebelling German firms are said to be owed at least €5m each. And though Saab says it is meeting with the Spanish firm to try to hammer out a deal, SvD reports that four of the 14 outstanding claims against Saab have run out of time. Lars Holmqvist, head of the European Association of Automotive Suppliers argues that, by paying some suppliers and not others, Saab is de facto bankrupt, and that a trustee should be brought in to pay suppliers in order of priority, rather than order of Saab’s necessity. Meanwhile, Saab CEO Victor Muller has been in Brazil and the US, trying to bring new investors on board, as its Chinese funding won’t be approved for two-to-three months, if ever. Meanwhile, “taxes and fees” must be paid by Friday, August salaries are due in just two weeks, and Muller cut his latest money-raising trip short to reassure workers back in Trolhättan. But according to thelocal.se, even the most optimistic of union leaders hope Saab will have a new CEO soon. Do I hear the fat lady warming up her vocal cords?

Over the weekend we told you Saab-watchers to “expect a run on the bankruptcy court in the coming days and weeks,” and according to Bloomberg the process has already begun. Christina Lindberg of the Swedish Debt Enforcement Agency tells the news service that eight suppliers have requested that their portion of the 104 debts registered with the agency be collected and that

We will start the collection process in a few days.

The good news? A previous request to place a Saab subsidiary in bankruptcy has been revoked as the supplier in question there was paid off. Now, however, with eight more debts going to collections (worth an undisclosed amount, we know that one debt alone is worth around $70m and estimates put the total at around $1b), the situation has become dire once again. The answer? Vladimir Antonov, of course! Thelocal.se reports that suppliers are pushing for the EIB to approve Antonov’s ownership stake, seeing the Russian as the only way out of the situation. And because the EIB will clearly never approve Antonov, another report that’s just breaking now says that Saab is seeking to “replace” the EIB loan in order to bring Antonov on board. The looming question: who on earth is going to lend this bleeding-out corpse of a company $350m? Does Antonov even have a billion to spare for his pet project? Needless to say, nobody has the faintest clue… they just know it has to happen. Yikes!

One of Saab’s suppliers, SwePart Verktyg AB, asked a Swedish court to declare a key Saab subsidiary, Saab Automobile Tools, bankrupt today reports Automotive News [sub]. Saab Tools owed about $935,000 to SwePart for tooling, and according to the supplier

More than one week has passed from the summons and payment has not yet been made. Saab Automobile should therefore be considered insolvent… We don’t want them to go into bankruptcy, I wish you understand that, that would be horrible, but we are a small company and for us that is a lot of money

Saab Tools was created to guarantee EIB loans for tooling, so had the “subsidiary” been declared insolvent, the whole ship would have gone down. But before a judge could act, Saab somehow managed to put out the fire, as a company press release proclaims

Swedish Automobile N.V. confirms that Saab Automobile Tools AB reached agreement on payment terms with the supplier that filed for bankruptcy, thereby resolving the issue.

Once again, Saab pulls the fat from the fire at the last minute… but the clouds are dark and rolling in fast. Many suppliers are still looking for money, Saab Automobile has 104 claims pending against it, and SwePart’s bankruptcy request won’t be formally withdrawn until Monday. And with the Swedish government and EIB seemingly unwilling to lift a finger to help, even the faithful are losing hope. This feels like the beginning of the end of the end…