IMPORTANT NEWS: National Electric Vehicle Sweden has agreed to buy the assets of Saab Automobile and the sale is expected to be finalized during the summer.

Saturday, July 23, 2011

How will a bankruptcy in Saab Tools affect Saab?

Friday's bankruptcy threat against Saab Automobile Tools AB shows us that not only the manufacturing company Saab Automobile AB is in trouble, but also the subsidiaries. And the question we have to ask ourselves is how a bankruptcy in Saab Automobile Tools AB (Saab Tools) can affect Saab Automobile AB (Saab), which is the company that produces the Saab cars.

From reports last week we know that Saab Tools has given a loan of around SEK 500 million to Saab. In addition, Saab Tools owns all the tools and machinery that are used to produce the Saab cars. Saab Parts is responsible for and has the commercial rights to produce and sell original Saab spare parts.

So let's consider a scenario where Saab Tools goes bankrupt, then what will happen to Saab?

The text below is of course only my own speculation based on assumptions and some info from the media.

From my understanding, when a Swedish company goes bankrupt, the control of the company is handed over to a bankruptcy administrator. In other words, Saab loses control of its subsidiary. The task of the administrator is to secure assets and funds in the bankrupt company, and to turn these into money to pay the creditors.

Then what will happen to the tools and machinery needed to develop and produce cars? Will Saab have access to these tools and machinery? And what about the loan given from Saab Tools to Saab? Will the administrator try to collect this loan, and in doing so filing for a bankruptcy in Saab?

The answer is probably that a bankruptcy in Saab Tools will remove all chance of a restart of the factory and in a short time lead to a bankruptcy in Saab.