Saab Automobile filed for bankruptcy Monday, a move that could end the company's 60 years of car manufacturing.
Swedish Saab, once owned by General Motors Co., opted for bankruptcy when efforts by Chinese investors to take over the financially strapped brand were unsuccessful. Negotiations to buy Saab and keep the automaker running had been under way for months, but over the weekend GM vetoed the plan involving Chinese investor Zhejiang Youngman Lotus Automobile.
GM operates in a partnership in China with state-run SAIC Motor Corp. Ltd and contends that providing parts and technology to Saab's new owners had the China investor deal gone through would have run counter to the interest of its own shareholders, according to Reuters.
GM still licenses technology to Saab and has a small ownership share.
After having received the recent position of GM on the contemplated transaction with Saab Automobile, Youngman informed Saab Automobile that the funding to continue and complete the reorganization of Saab Automobile could not be concluded, Saab owner Swedish Automobile in a statement.
The board of Saab Automobile subsequently decided that the company without further funding will be insolvent and that filing bankruptcy is in the best interests of its creditors.
Saab's application is expected to be approved Monday in the Vanersborg District Court, the company's statement said. Saab is likely to be broken up into pieces and sold, ending the company's longtime operation as an automaker, observers believe. Some hold out hope, however, that a buyer will emerge keeping manufacturing jobs in place.
Our absolute hope is that the bankruptcy administrator will aim for a solution where the company is sold in its entirety, said Trollhattan, Sweden, Mayor Paul Akerlund, where Saab employs 3,000, in a statement.
Saab has been cash-strapped much of this year, halting production under massive debt to suppliers and unable to obtain financing.
Saab entered the automobile market after World War II after starting as an aircraft manufacturer. Saab cars were the first to have heated passenger seats, beginning in 1971.