Take this as a good sign, today 41 US dealers asked a judge for Chapter 11 protection which would allow them greater involvement in a liquidation and to preserve whatever structure they can in case a bid for the entire company is accepted. Automotive News published an article today explaining the situation with quotes from the dealer group’s attorney Leonard Bellavia. He is representing 162 of the 188 US dealers in the bankruptcy proceedings.
“We filed a [Chapter] 11 just in case a white knight comes out of nowhere and buys Saab’s parent,” he told Rick Kranz of Automotive News. In the US, a Chapter 11 differs from a Chapter 7 in a few key areas. He explains it in his statement on behalf of the dealers today.
The Chapter 11 allows Saab an opportunity to liquidate its assets, with direct supervision of the court and the dealers.
In a Chapter 7, a trustee is appointed and the costs of liquidation become greater because the trustee is paid commissions, and has to hire new counsel that does not have the knowledge of Saab’s current counsel, an additional substantial cost to creditors.
Because of this, we believe that since the assets are liquidating under either Chapter 11 or Chapter 7, allowing Saab to liquidate, with dealer supervision, is the most effective way of minimizing the costs of liquidating the assets.
You’ll remember that McTevia & Associates is handling Saab Cars North America’s operations right now, and as such have control of the liquidation were they to file for bankruptcy. This was the dealers’ attempt to get a seat at the table to ensure that their and Saab’s best interests are preserved, and I hope that the judge in Delaware grants their request.
It’s no secret that this process is beyond frustrating for all involved, but I’d say for none more than the dealers. Everyone with a stake at Saab from the factory workers to engineers have gone through huge loss, but the dealers were left holding the most financial loss from the bankruptcy. I hope that for all involved a solid sale to an interested party who wishes to run Saab in the same way that Tata runs Jaguar Land Rover can be achieved within the next few days and weeks. Until then, we’ll sit and wait on the sidelines for other signs of positive things to come.