Swedish car company Saab, which has long been troubled financially, has filed for bankruptcy. The move came after the firm was unable to secure fresh funding from potential Chinese investors.
The move to push away further investment followed from the reluctance of General Motors (GM), American car firm. GM felt that the Chinese investors should be kept out of Saab’s business at all costs, as they do not want Chinese carmakers to have access to technology licenses.
GM felt that Western carmakers would be far less competitive in the Asian market if China were to get hold of the technology that comes with buying out Saab.
Being pushed out of a booming Chinese market could spell disaster for carmakers GM, who have had their fair share of bailouts and bankruptcy scares.
Chinese investors have been floating the company for several months, as Saab has been in takeover talks with several companies, including Zheijang Youngman Lotus Automobile.
After GM’s intervention, however, Saab said it had little choice left but to file for bankruptcy.
Already Saab’s main plant in Tollhattan, Sweden has seen suspended production since April, as the company had difficulty paying its suppliers.
Workers say they have not been paid since last month.
The recent negative position of GM concerning the possible acquisition of Saab made Youngman Lotus Automobile decide to stop putting money to a company that it would not be blocked from acquiring.
Therefore Saab received notice that “the funding to complete the reorganisation of Saab could not be concluded,” the Swedish carmaker said.
The firm went further to say that its board has decided that the company will be “insolvent” without further funding.
“Filing bankruptcy is the best interests” of Saab’s creditors right now, says the firm.
The insolvency does not come as a surprise, though many global investors had hoped that Youngman or other Chinese firms looking to acquire a vast automobile patent portfolio would save the Swedish carmakers.
The company was told last week by a Swedish court that they would need to file for bankruptcy without a credible rescue plan.
That same week saw the Dutch financial market regulator halting trading in Saab shares.
Saab was sold to Dutch luxury carmaker Spyker in 2010, though GM still remains a stakeholder and supplier.