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Saab Denied Creditor Protection By Swedish Court

Posted in auto industry, News, Saab by Kurt Ernst | September 9th, 2011 | 3 Responses |

And then, it was over. Barring a last-minute miracle, chances are good that the doors of Saab will be closing for good in the coming weeks. A Swedish court denied the automaker’s petition for creditor protection, which would have given Saab the equivalent of a reorganizational bankruptcy. With that option off the table, it’s virtually certain that the company’s labor unions will file bankruptcy proceedings against Saab, which is a necessary step for Saab’s workers (unpaid since July) to receive unemployment benefits.

The court rejected Saab’s request, saying that it was unclear how the company would find additional funding to continue operations. Saab’s received $340 million in commitments from Chinese partners Youngman and Pang Da, but both deals require the approval of the Chinese government, which isn’t likely to be granted. China wants to downsize the number of automakers in-country, giving rise to two or three brands that can compete with the likes of GM and Toyota. Approving deals with smaller foreign automakers goes counter to this strategy.

Saab has appealed the court’s ruling, but many saw this court, in Saab’s home region, as being the most sympathetic to the automaker. With no court ruling to protect it, Saab’s demise is all but certain.

Source: The Detroit News

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3 Responses

  1. Set says:

    This makes me quite sad. I love Saabs, and it will be the one of the saddest closings of my lifetime so far.