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Saab Can't Pay Its Employees: Is The End Near?

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2011 Saab 9-5

2011 Saab 9-5

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Saab's troubles since leaving the General Motors fold for Dutch ownership and Russian banker courtship have been many. Production halts, inability to pay its suppliers, and now, inability to pay its employees--the list is growing more and more desperate, and the company is too. This could be the end of Saab.

In mid-June, Saab's corporate parent Spyker was still seeking financing for the ailing Swedish brand by courting various Chinese automotive firms, including Pangda Automobile Trade Co., a network of dealerships, and Youngman Lotus Automobile. Those deals fell through, leaving Saab without any cash or much in the way of prospects.

Just this week, Saab extended its production shutdown, which has been in place intermittently since April, through July 3. Saab said at the time that it planned to return to normal production from July 4-24, but the latest development casts that in doubt. A day later, Saab revealed it was unable to pay its suppliers, asking them instead to take 10 percent of the debts owed, with the rest promised to come in September. Saab's supplier debts were estimated at $47 million.

Today, Saab announced it is no longer able to pay its employees because it hasn't received any short-term funding. Discussions with "various parties" are ongoing, but at the moment, it's not clear where the funding would originate. Saab itself acknowledges that there can be "no assurance that these discussions will be successful or that the necessary funding will be obtained."

If Saab can't pay its workers, and financing isn't found very soon, it may be the last straw for the company. Employee unions at Saab have already threatened legal action against the carmaker for unpaid wages. If that lawsuit gets enough traction, it could force Saab into bankruptcy. That Saab would emerge relatively whole from the process, given its current straits, is unlikely.

[Bloomberg, Reuters, Auto News (2) -- sub. req.]

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Comments (7)
  1. Not paying your workers wouldn't work for me. I don't know about you people. Yikes. I think Saab's toast elec-tus. Dust.
     
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  2. Just kill it... yes, we will miss it but it'd be a blasphemy even if they received some additional funding (Russian Saab? Chinese? wth?) Unless the socialist Swedish gov't buys it out (they still can afford it) then it doesn't make sense to do anything else.
     
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  3. It certainly looks like the beginning of the end for Saab. They need cash now and the deal with Pang Da and Youngman is not expected to gain approval by the Chinese government. Even if the government approves the deal, it will be at lease three months until Saab sees any money. They're toast.
     
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  4. This is like someone taking away Christmas...I may never get the 9-5 I asked Santa for...
     
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  5. @Michael Akers - there are plenty of 9-5s sitting on car lots right now. Buying a car is the best way to help Saab as the money goes to them. It will help your dealer too. Plus, you'll get an awesome car.
     
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  6. Remember the scene in the Blues Brothers - where the 74 Monaco police car was breaking through the barriers of the still under contruction freeway? Luckily for Elwood and Jake - they were able to lock on the brakes after smashing through the "stop - construction work" barricades. Well, SAAB has broken through all the barriers and is headed for the big drop - like the Pinto wagon of the Illinois Nazis - it isn't the End SAAB - it HAS ENDED.
     
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  7. So what does this means to SAAB cars owners?
    can someone help me understand it?
     
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