By on February 20, 2009

Today, the Supervisory Board of Saab decided to declare bankruptcy, Automobilwoche [sub] writes. The 4000 employees of Saab are being informed at a meeting how the company will continue. The company is now under the supervision of an insolvency administrator. Since Sweden’s government had turned down bailout requests of the mother ship GM, according to Swedish media, one possible solution would be a merger of Saab with a spun-off Opel.

[Here’s a link to the document filed today at the court. The English version starts on page 7 of the pdf.]

Reuters reports that Saab made a loss of about 3 billion Swedish crowns ($340.1 million) in 2008, according to documents filed by the company with a Swedish court. It expects a similar loss this year. “We explored and will continue to explore all available options for funding and/or selling Saab, and it was determined a formal reorganization would be the best way to create a truly independent entity that is ready for investment,” Saab Managing Director Jan-Åke Jonsson said in a statement.

In its court filing, Saab said GM has said it “would not fund further the projected losses of the company (Saab),” but would provide liquidity for the company to pursue a reorganization.

Swedish daily Dagens Industri said on Friday that Saab parent GM is prepared to pump in US$400 million to help make its Saab car unit profitable if the Swedish state guarantees a further loan of US$590 million to Saab.

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28 Comments on “Saab Declares Bankruptcy...”


  • avatar

    It may look like lawyerly maneuvering, but asking for reconstruction accommodation is not the same as declaring bankruptcy.
    What the Saab board has done, is request a window for reorganizing the company into a viable entity, and to be protected against being declared bankrupt by its creditors during that period. If their request is approved by the court, then they will be granted such protection, and a formal period of reconstruction will begin, limited to nine months.

    For all practical purposes, no matter what you call the beast, it will kill consumer confidence in the brand. What might save matters are plans re an Opel/Saab merger.
    The headline should read: Saab calls for protection against being declared bankrupt by its creditors.

  • avatar
    hazard

    As I understand this like a US Ch. 11. Well, at least one GM subsidiary has done it!

  • avatar
    TomJones

    Let’s hope that this is the first step for both Saab and Opel to liberate themselves…

    On another note, GM’s benefits to the world have been proclaimed in this Free Press article:

    http://www.freep.com/article/20090220/COL14/902200390/1014/BUSINESS01/World+needs+GM+to+succeed+in+all+countries

  • avatar
    jolo

    That picture looks exactly like my 1977 Saab 99 back in 1984 when I was in a traffic accident. Walked away with a sprained wrist. Told myself I would eventually get another Saab, but after GM bought them, decided against it. The best riding small car I ever owned and I have a Honda and a Toyota now.

  • avatar

    @Stein: In the U.S., both Chapter 7 (basic liquidation for individuals and businesses)
    and Chapter 11 (rehabilitation or reorganization) are called “bankruptcy.” Saab most likely filed for the Swedish equivalent of Chapter 11. In the UK, it would most likely be called “administrative receivership,” in Germany “Vergleich”

  • avatar

    I agree, Bertel, it is maneuvering. If you call for protection against being declared bankrupt, that means you’re …

    :-)

  • avatar
    ex-gm

    Here’s a link to a pdf of the actual document filed today at the court:

    http://www.sr.se/Diverse/AppData/Isidor/files/83/5998.pdf

    The English version starts on page 7 of the pdf.

  • avatar

    In the 70’s, I sat in a Saab 96, driven by my Finnish GF Riita, a rallye driver. We went down a dirt road in the Finnish countryside at her usual speed. A VW Bug appeared in the middle of the road. The road was too narrow to pass, and the gravel made it slippery as ice. She muttered “that guy is toast” and then “hold on.” She crashed into the side of the Bug, took out its door and B-pillar. The Saab busted the left blinker.

  • avatar

    Today is a great day.

    And Trollhattan Saab is now relocated to http://www.saabsunited.com

    A great day!

  • avatar
    TireGuy

    Bertel Schmitt :
    February 20th, 2009 at 6:53 am

    @Stein: In the U.S., both Chapter 7 (basic liquidation for individuals and businesses)
    and Chapter 11 (rehabilitation or reorganization) are called “bankruptcy.” Saab most likely filed for the Swedish equivalent of Chapter 11. In the UK, it would most likely be called “administrative receivership,” in Germany “Vergleich”

    Bertel, you are still living in the old German world. As stated quite some time earlier, german insolvency law was changed about 10 years ago. There is no “Konkurs” or “Vergleich” any more – both merged into the “Insolvenz”, which does not differentiate any more whether it is for liquidation or reorganisation.

  • avatar
    Viceroy_Fizzlebottom

    @ Bertel Schmitt

    You dated a rally driver? That’s awesome! =)

  • avatar
    snabster

    As GM is SAAB’s largest creditor, this is less about reorganization than negotiation. As a SAAB owner, I don’t want to see SAAB disappear, but this is a gun to the head of the Swedish government: give us $400 million or you lose 4000 jobs.

    Not sure where the agreements with the US dealers are signed. SAAB’s only assets in the US are the cars on dealer lots, so in a real bankruptcy it would be interesting to see how the US dealers try to cash in.

    I read somewhere else that the plan is SAAB could be profitable with sales of 120K cars a year. Given the destruction in consumer confidence, lack of investment in a new 9-3 model and bad blood from the bankruptcy I don’t see them making that number in the next five years.

  • avatar

    @Tireguy: I yield to better knowledge. I left the fatherland in 1982, and it shows

  • avatar
    threeer

    What will this do to the value of existing SAABs? Not that I’m 100% interested in one, but if a decent three-year old 9-3 could be had for cheap now, it might be…

  • avatar
    Morea

    So Saab is a subsidiary corporation of GM and not a full-fledged division like, say, Buick? How many of the other parts of GM are held like this? Hummer? Saturn? Opel? Vauxhall?

  • avatar
    PeteMoran

    @ Tireguy

    I was not aware of that either, is that something to do with the EU?

  • avatar
    no_slushbox

    Stein X Leikanger:

    All business strategy could probably be considered maneuvering, but this is not “maneuvering” in some cynical sense.

    In the US, at least, we go by the priciple that a company can have liabilities that are greater than its assets, or meet some other definition of bankruptcy, yet still have more value as a going concern than as individually liquidated assets.

    Chapter 11, recievership, reconstruction accommodation, etc. is a test of whether that is true or not, not simply manuevering.

    As a left of center American that believes in the market I find it admirable that the Swedish government rejected GM’s thugish demands and allowed Sweeden’s rule of law for failed companies to prevail over political favoritism.

    By many international measures the Nordic States are considered the least corrupt in the world, and rejecting the demans of a criminal like GM further establishes that.

    Hopefully the rest of Western Europe, and eventually the US, can follow Sweden’s example.

  • avatar
    Robbie

    Saab only has 4000 employees?

  • avatar
    Ingvar

    Saab CEO Jan Åke Jonsson flat out condemns GM Management:

    “The company losses stems from a downturn in demand due to an aging product portfolio, non competible cycles, a thin portfolio of products, and unused product capacity.”

    http://www.e24.se/branscher/verkstadsindustri/artikel_1108211.e24

    Though I’m not skilled enough to translate the rest of the article, I’m sure these headlines will turn up in english media.

  • avatar
    Richard Chen

    I’ve used Google Translate, Swedish to English a couple times this week. Sometimes readable, sometimes not.

  • avatar
    postjosh

    Robbie :
    Saab only has 4000 employees?

    my reaction, too. in the states we’re shedding about 4k jobs every six hours.

    seriously, i will miss the artist formerly known as saab. my dad had a base model 900 (2 door 5 speed manual). it was the only fwd car i have ever enjoyed driving in my life. probably saved his life, too. hit a patch of ice and slammed into a guard rail. the entire driver side exterior was pushed in. from the inside of the car, you couldn’t even tell there had been an accident. his shoulder was sore for a month from the shoulder harness (pre-airbag years). when he priced a replacement car he sadly concluded that saab had gone so upscale that he couldn’t afford another one. bought an acura integra instead. and that is the sad sob story of saab (sorry).

  • avatar
    menno

    Well, postjosh, your story may have shined a light onto the only logical open exit left for a post-GM Saab Auto, if one continues to exist.

    Market the cars as life-savers, pull content, make “frugality” a virtue, cut costs at home as best they can, concentrate on one basic car line, build as much of it they can themselves to employ their own workers, take advantage of the sales organization in place worldwide (itself the envy of how many car manufacturers in India, China and elsewhere?) and vow to either succeed and adapt, or close. No more mergers, no more dilution of what Saab is/was. No badge-engineered GM SUV’s, no badge-engineered Saabarus. GM were / are ignoramises.

    Then if creditors think it’s viable, do it. Otherwise, it’s history.

    BTW moving a marque down-scale after moving it up-scale can work. Look at Packard moving down to the middle-priced shark-infested waters in 1936 with their 120, and then the even lower cost 110. Unlike Packard, which survived another 20 years or so, Pierce-Arrow didn’t make the move to the mass market in time (there were last-minute maneuvers to utilize a Hayes – Grand Rapids Mich built body also used by Reo, for a middle class car but it collapsed and so did Pierce-Arrow).

  • avatar
    TireGuy

    PeteMoran :
    February 20th, 2009 at 8:21 am

    @ Tireguy

    I was not aware of that either, is that something to do with the EU?

    No, this was a reaction to the feeling that the german bankruptcy law was too much steering towards liquidation. “Vergleich” nearly never was used, and was not as flexible as e.g. Chapter 11. Chapter 11 was in this regard seen partly as an example how the law could be structured more efficiently in a way as to allow companies really to restructure. To get rid of bad feelings from the old names, they then called it “Insolvenz”. However, this has still been used only rarely – nothing compared to the many Chapter 11 cases from the US. However, just recently in some high profile cases the Insolvency proceedings shall now be used for restructuring, namely for Märklin (train model maker, THE brand for theses toys) and Schiesser (lingerie).

  • avatar

    So, is Saab going to go away? Or not?

  • avatar
    Robert Schwartz

    @Viceroy_Fizzlebottom: Bertle is hardcore. Click this link, and look for Typhoon under Vee Lite.

  • avatar
    RetardedSparks

    This is the only bright spot in the whole mess. Saab used to be a very cool niche company until they got crappified by GM.
    I would love to see them independant again, or maybe teamed up with Opel.
    They should work a deal with the Saturn distribution network to stay in the US. I think the no-hassle dealer experience would really appeal to the type of people who used to buy Saabs, and probably would buy them again if they weren’t GM step-children.
    Hell, Saturn should tell GM to go pound sand and split NOW, not in 2012!

  • avatar
    Runfromcheney

    According to the Gospel of Wikipedia, this is Saab’s way of trying to get out of GM’s stranglehold.

  • avatar
    50merc

    If Sweden doesn’t care if Saab dies, why should America?

    There is terrific global overcapacity in car production, and Saab is a “damaged brand.” (At least for the relatively few who know what a Saab is or was.) Sweden is a wealthy nation with cradle-to-grave welfare. Punitive taxes further level the living standards of the working and non-working. The Saab employees won’t be badly hurt by losing their present jobs. It is time for Saab to join Packard, Kaiser, DeSoto and thousands of other extinct marques in automotive Valhalla.

    The real question is this: how can GM let Saab die without incurring staggering liabilities owed to former dealers?


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