BMW Is Suing Saab Parts

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We have had some posts to other threads concerning the lawsuit filed against Saab Parts by BMW and I was waiting for more of a story to unfold before just post BMW sues Saab as that is not much of a story. Thankfully I have found a fairly complete story on Nasdaq.

It would appear that the German car maker BMW is suing Saab Parts AB for 2.6 million euros plus interest for unpaid deliveries. The lawsuit was filed in the Swedish district court in Nykoping Monday.

Lennart Stahl, Chief Executive of Saab Automobile Parts AB, said the company has contested the claim in earlier contact with BMW’s lawyers and that it will go over the claim again. “Our lawyers will now go through the lawsuit carefully and see if anything new has been added before we decide what to do,” he said.

This all dates back to September of 2010 when Saab/SWAN and BMW entered into an agreement to supply and develop 4cyl gas engines to be used in the 9-3. The agreement also covered components and spare parts. A large number of parts and components were ordered by Saab and never paid for. Saab throughout 2011 did not have the means to pay for the outstanding bills and filed for bankruptcy in December.

The lawsuit is saying that Saab Parts is liable for the unpaid bills since Saab had declared bankruptcy.

However, Mr. Stahl doesn’t believe Saab Automobile Parts should have to pay for components ordered by Saab Automobile. “Saab Automobile Parts AB have not ordered or received any spare parts or components from BMW,” he said. “Why would a spare part company order components for a car model that’s not yet in production?”

Shares in Saab Automobile Parts AB were put up as collateral by Saab Automobile AB in exchange for state-backed guarantees for its loans in the European Investment Bank. The Swedish National Dept Office, the authority which guaranteed Saab’s loans in the EIB, has declared its intention to sell Saab Automobile Parts AB in order to collect Saab’s debt.

I am no lawyer but I think it will be a bit of a difficult battle to collect debt from Saab Parts which has now been taken over by the NDO. If you can go after Saab Parts when that is not the branch that ordered these parts, what’s to stop suppliers from doing the same thing? I do not think from what I read here that there is much of a case against Saab Parts and unfortunately for BMW they are in the same boat as many of the suppliers and I think it’s almost an insult to suppliers for them to view themselves differently. We have suppliers who have been affected in a very critical way who have lost business and employees in downsizing measures because of what happened and they are not getting special treatment so I would hope that BMW is treated in the same manner. As big a number as 2.6 million euros is, for BMW they will survive through this, for a supplier that number would kill most of them.

If I am wrong then this could be a disaster for the NDO and Saab Parts but I think that is a huge stretch to think that they can go after a company that was used as collateral like Saab Parts.

73 thoughts on “BMW Is Suing Saab Parts”

      • Have they reaaly disappeared? Is it not possible that these engines are now sitting in prototypes for the Phoenix and other assorted secret stuff? And therefore not very easy to ship anywhere?
        I mean secret stuff is secret stuff, and therefore … secret. Especially for competitors, of which BMW is one.

        • it’s not exactly the article I had in my head but :

          …according to TT, lawyer Susanna Norelid is representing BMW which has a claim at Saab for about 25 million SEK. This claim stems from the 54 engines that were sent to Saab in the autumn of 2010. They were sent there for testing and development, but now BMW wants these engines returned.
          – they are not part of the bankruptcy documentation so we really don’t know where they are and BMW are concerned that these engines could fall into the hands of another manufacturer.

          SU april

  2. There are several pints here:

    1. Who ordered the goods subject to the action [ie: What name was on head of the order].
    1a. Was there any guarantees issued [ie: Any Promise of a third party to pay, if defaulted].
    2. Where are the items & where were they delivered to. If to Saab Automobile AB, why is the Administrators not involved.
    2a. Saab Automobile Parts AB say they have no deliveries.

    Plus many more.

    • based on Stahl’s comments I would tend to think they were not ordered by Saab Parts and I think even BMW has said they were going after Saab Parts because Saab went into bankruptcy but Saab Parts continues to operate. Saab Parts has been handed to the NDO though which is an agreement that was based on the EIB loan and I would tend to think that, that would supersede any other arrangements.

      • .
        Jason,

        2.6 million euros of parts is alot of stuff, where is it all now, & where has it gone?
        Although the article says ” A large number of parts and components were ordered by Saab and never paid for”. Were they delivered?, or is BMW claiming money against a contract not fulfilled.

        • terry, it is a large number as I stated, where it is I don’t know and is not really the question here. The question for me is more of how do they think they can go after Saab Parts when that was turned over to the NDO as they were to receive Saab Parts for the EIB loan

          • Well, maybe the remain of the parts could indeed be the question. If these parts are still somewhere on Saab’s premises, unused, why not simply return them to BMW? This will at least alleviate the problem.

              • I read this story too and I still think it changes nothing. Saab parts was basically repossessed if you will, as it was collateral for the loans. If I rack up my credit and buy stuff I can’t pay for and my home is repossessed, the equity in my home won’t pay my car loan if I owed the bank or in this case NDO who originally back my loan with an initial agreement to take my home from me if I went broke. The agreement with the NDO who backed the EIB loan with the intent that if all went south and Saab went bankrupt, they would get Saab Parts takes precedence over anything that happens after the fact as Saab Parts would have had a lien against it to ensure the NDO would have their investment protected. I get that BMW wants the money, but so do a lot of people and BMW’s actions weather they see them right or wrong disgust me and I would be embarrassed if I were them to do this. They are not more special then anyone else affected by what happened and they sure seem to make it look like they think they are. There are companies that went bust because of the Saab mess and BMW is NOT even close to being one of them.

                  • I think there are two parts here:

                    1. A Ist Charge takes president over all other debts, but only to the amount owed on that charge. The NDO, has such a charge, and the values have already been discussed on SU, ie: the EIB loan way exceeds the value of Saab Parts.

                    The above does not stop another creditor claiming money from Saab Parts, just that [if Saab parts were to go bankrupt], the NDO would get preference], so BMW would probably not get anything even if they did win the case, BUT they could drive Saab Parts into bankruptcy if they get a favourable judgement.

                    2. BMW’s claim comes down to ‘IF’ they have what they say ie; [Saab announced that the company had the best ability to pay would be listed as the addressee on the invoices] in writing & the original invoices show Saab Part AB as this, then Saab parts would be liable too.

                    Alternatively BMW might just be using the agreement to supply Engines to Saab Automobiles AB and spare Parts/Components to Saab Parts AB [delivered both to Trollhattan Nyköping {although denied by Saab Parts}] and have interpretated this. as both Co would be responsible for any goods supplied to either [any Saab AB company [whichever could pay].

                    I am surprised at the closeness of the dates in the TTELA article, as it suggests, ie: agreement signed September 29, 2010 and amended in October 2010.
                    The TTELA does not say when the goods were delivered.

                    Either way, it will come down to what the papers in the case say.

                    Jason:

                    Regarding your scenario, If there was spare collateral within the repossessed House after the Mortgage Bank had been paid, the other debtors could claim their debts, but would likely need to go to court to get an order.

                    The Agreement between Saab & BMW is business, and there is no sentiment in that sector.

                • NDO used the shares in Saab parts as collateral for their loan. Logical, because that entity was less likely to go bust, than other parts of the Saab group.

                  When their loan did not get repaid, upon the bankrupcy, then that triggered the clause to take possession of the shares, per the terms of the loan agreement.

                  They now had a “valuable” entity to either dispose of, or run. They chose to run it. Basically, it’s as if a company had sold as a going concern
                  It’s legal obligations completely remain, in force, as before the sale.

                  Yes BMW saw a way to attempt to get paid. So what?! They have every right to. They had an agreement, they delivered, Saab did not.

                  Seems more black and white than spykers one.

                  • well surprise we disagree, I do not believe that BMW can get their money out of Saab Parts because they are a different company then Saab Cars and unless they can show that Saab Parts ordered the engines and such, I think it’s a stretch.

                    • This is not abt money i believe. BMW is putting preassure to get back all the engines that they let Saab use. Basically make sure their technology ends up in Chinese hands. They
                      might want to settle out-of-court.

                    • I’m not disagreeing simply to be contrarian.

                      Let me elaborate.  It’s long, I had nothing else to do on a flight to Germany!

                      Rather than arrive at the conclusion  ” that BMW has no case, because it’s invoice was with an entity that now no longer exists, due to bankrupcy” I have to think that BMW’s lawyers are smarter than that, and therefore have some realistic legal argument against that defense.

                      They also are not likely to be on a fishing expedition, 2.4 million eur  is a drop in the bucket for them, so they don’t need to do this for economic reasons.

                      So how *might* they have a case?

                      None of us know what the initial agreement was, or who it was between,  who signed it and in what capacity.  All of which would be relevant in the courtroom.

                      BMW may also have had a different agreement from other suppliers; they were not a prior supplier, generally in, or reliant on, the auto supply business, they were not in anyway involved with Saab before the spyker era,  not dependent on saab and have a stronger brand name in their own right. Therefore, they would probably have been able to dictate the supply agreement terms from a far stronger position than a normal supplier was able to do.  BMW would be well aware that they added cache and potential value to Saab beyond simply ‘supplying an engine’.  

                      Here’s the only “facts”that we,  and maybe anyone else outside of BMW and Saab parts legal departments are aware of so far. 

                      1.  They are owed 2.4 million for parts or services delivered, but not paid for.  Some of that 2.4 million eur may be for a royalty fee.  Who knows.  Certainly 50 engines are not that kind of money.

                      2.  “someone” made the representation that because of cash shortages, a different entity within the Saab group was going to pay for them – presumably, Saab parts, as they may not have had the cash-flow issues that other group companies had.

                      Lets assume that one of the now bankrupt entities ordered the parts.   No one within that particular company could have legally made a representation at that time, that another group company is going to pay.  Not that would stand up in a court of law, anyhow : ‘Hans from BMW telling the court that “Jens from Saab powertrain told me that Nils from Saab parts was gonna pay our overdue bill” ‘ probably won’t work!

                      So, if that is the legal premis of BMWs argument, then how high up within the Saab group of companies do you have to go before such a payment promise may actually hold legal water?

                      You would need to go very high, to the organisational point in the group that a person or persons have the legal authority both in company A who ordered the parts, and had difficulty paying for them, and daughter or sister company B who was told to assume the responsibility for it.  It is probably going to have to be in writing too,  not hearsay, to be valid in court.

                      In my experience of a Swedish group of companies, I don’t think you would find any employee in the economy department making that kind of decision on their own.

                      By the way, It’s probably totally legal to do, when both entities are owned by the same parent, and companies within the same group are always sending artificially high or low invoices between themselves for all sorts of reasons.    Im sure it created an accounting nightmare though.

                      Anyway, thats why I don’t think anyone should summarily dismiss this case as frivolous.

                    • The case feels strange, because if parts were delivered those parts presumably were not simply thrown away…

                      I would be surprised if those parts were not part of the bankruptcy estate. Is this not a situation the receivers were supposed to sort out?

                      (The early reports said parts AND services btw, not OR)

  3. This makes me concerned if it does continue. Parts are already pretty scarce and I just recently purchased a 9-3 Aero. All this uncertainty makes me feel like I should sell it before things get worse.

    • Gregory, parts have been getting better in a good way lately. If you read my post on SPNA last week, you will see a great number of back ordered parts are no longer back ordered and I am awaiting some information on questions posed from that post on others. In short, parts is getting back to where it once was and will continue to get better.

        • Randy, we’re working on getting some answers there. I’m assuming you’re talking about the 9-5 and 9-4x as the 9-3 parts are fairly free flow. I have sent off some questions on both and should hear back soon.

          • I was talking about the 2010 and 2011 9-5 NG units, I think their are over 10,000 owners of the cars world wide that can’t even get a winsheild, let alone a head lamp assembly, and heaven Forbid a body panel.
            Where is the tooling we heard about, that AB was to get, why can’t SPNA ask a glass company to make glass for these vehicles? St Gobain shoul be already set up to do so.
            The customer base is just waiting for these parts, and will buy them even if they don’t need them right now, because many 9-5 NG owners already consider keeping these cars longer then most auto buyers woul normaly do so.
            thanks Jason for looking into this.

    • Sorry Gregory, if I didn’t write anything people would think I was only writing about the fluff but I have no problem bringing this stuff out to but preferably when there is a full or complete story. I found this one which gave more info then was first out there this morning.

  7. This just feels ridiculous – Saab Parts isn’t responsible for Saab Automobile’s debt since they are two different limited companies (called aktiebolag/AB in Sweden). Unless they had some very strange deal with BMW, but then Lennart Ståhl should know it… I’m not worried (even though I live in the town where Saab Parts is located) and I suggest that you aren’t either.

    • Nope, I think Stahl has a very good understanding of it too and was quick to answer the questions. Normally if someone is unsure of where their company stands they are not available to comment.

      • I suppose part of the question here is, are BMW claiming for this same debt?, as a creditor against the bankrupt estate of Saab Automobile AB,

  9. I am no lawyer, but it sure sounds like Jason’s analysis is correct.

    A large number of parts and components were ordered by Saab and never paid for. Saab throughout 2011 did not have the means to pay for the outstanding bills and filed for bankruptcy in December.

    You could apply those same two sentences to many of Saab’s suppliers. Why should BMW expect special treatment? They need to wait with the other suppliers to see if any money comes back their way toward Saab’s debts from the sale to NEVS (assuming that completes).

  10. But it would be refreshing to say to the naysayers, that always claimed that Saab was a liability for the Swedish taxpayers, “No, actually, it’s BMW that is costing us money”

  11. Saab Parts should initiate a law suit against GM, the Swedish Minister of Finance, BMW
    for damages. The lack of support by the aforementioned destroyed the brand

  12. For those of you who are worried that this may affect availability of genuine Saab Parts: Even if Saab Parts hypothetically had to pay this sum, it wouldn’t be a total disaster since they are a very profitable company with good liquidity. It’s a big sum, yes, but I’m pretty sure they’d manage it without any major issues. If you look at the annual report, Saab Parts made a loss last year but I’m pretty sure it was due to within-concern money transfers (don’t know the English term) to Saab Automobile (which did occur). Their profit margin was actually more than 30% in 2011, compared to Saab Automobile’s -46 % in 2010.

    Here are the numbers: http://www.allabolag.se/5566029277/bokslut

  14. Gee, in a perfect world: BMW would be compensated with the Saab factory, Saab name and logo, Phoenix platform—-all under the condition that they revive the Saab brand and sell Saabs in BMW showrooms! By the way, I heard again that the next 1 series will be front wheel drive.

    • The BMW-Saab story could have been a nice one, but it is not.

      At the end of the day we will never know who said no, BMW or the receivers.

      • Administrators can basicaly tell us/public whatever story they want and we have to buy it, cos we have no means whatsoever to check it and find out which companies participated in bidding process and how much they were willing to pay for assetss.
        I think it has to remain a very hidden secret for administrator’s sake, if you know what i mean.

  15. BMW should have put a bid in for Saab of say 2.850m euro & deducted the debt.

    That way they’d have got their money & a Car plant [+ Saab] for free & their engines back!!.
    Bet the Silly Sod’s didn’t think of that.

    After all the gossip is NEVs only paid [if they have paid yet] about 250m Euros.

  16. While I can understand them for being rather miffed about the unpaid bills, it seems rather bizarre for BMW to come after Saab Parts. Surely they must be aware of the suppliers that have been devestated by Saab’s bankruptcy? I almost wonder if this another example of a corporate “the left hand being unaware of what the right hand is doing” type of situation.

    • No, Not Really.

      Its pretty clear that BMW is trying to do an end-run-around on the bankruptcy process by going after a profitable, and now separate, entity. Lets not forget that the whole point of NEVS paying for the Bankruptcy estate, is to fund the settlement of Saab Automobile AB’s debts (which includes those rightfully entitled to BMW). Saab Automobile Parts AB was established as a separate from Saab Automobile AB with the purpose of isolating the distribution of spare parts from the volatility that the automaker has been faced with.

        • The only agenda I could see is their desire to get the money back and for that: I can’t blame them.

          But going after the Parts company is cheating and I am frankly surprised they don’t seem to know any better.

  18. If Saab Parts and Saab Automobile are two different companies then I would think BMW could only go after the one it had a contract with. And if BMW can go after Saab Parts then I think any supplier can. So I don’t think this will go far. Sweden didn’t guarantee all of the suppliers.

  19. Mabye the BMW engines aren’t lost but accidentaly shipped to The Netherlands. I couldn’t find an Enlish article but google ‘Saab’ and ‘Rhenoy’ and you will find a hit on an article from automotive-online[DOT]nl. For an amount of money they will not make public Rhenoy has purchased over 3500 engines, 4000 gear boxes, 2000 AC pumps, 2000 turbo’s, a lot of suspension parts, steering parts, starter engines etc. Rhenoy has intentions on selling the parts worldwide and they are now talking to Saab Parts in becoming an official supply partner.

    • None of those BMW parts would fit a current Saab, so it makes no sense to buy “prototype” quality parts to sell them later.

      • I know they won’t fit but what if the receivers made the mistake of selling the BMW engines along with all the others. 3500 engines… that’s a LOT of shipping containers. The article states that Rhenoy had limited space to store the parts so they would have to rent other storages as well. Perhaps not ALL of the shipping containers are checked for their actual contents.

  20. I think the missing link here is Saab Powertrain, I think it was and is a AB(aktiebolaget) on its own. Saab Powertrain must have been the one that bought those parts from BMW, as they must have been mostly engines. Saab Powertrain is still working, developing different things for other companies (Hallo GM!!!).

    The question is, Does Saab Powertrain (or the former Saab Powertrain) belong to Saab Parts, or is it part of the bankrupt Saab Automobile AB?

    • I think that SAAB Powertrain was a part of the bankruptcy estate, and is in process of selling to NEVS. So, no money from them either.
      And yes, you think like a normal person, SAAB Powertrain was probably key part of this puzzle. But BMW can not chase them, so they decided to chase SAAB Parts, that is the only part of SAAB not being put in bankruptcy and having some money.

    • It was my understanding that the ongoing Engineering efforts for Saab Powertrain are now operating under LeanNova. However, the business entity remains with the bankruptcy estate, which should have absorbed all liability – If not then what was the whole point of the bankruptcy process?

      At this point: bankruptcy is something I have become all too familiar with. First it was our beloved automaker, then my hometown. I fear California could be next.

  21. So this was the source of the whole BMW rumor in the bankruptcy roller-coaster. BMW was sniffing around in order to get either money or their engines back. So finally we know that there is no substance in the BMW take-over stories.
    I also think that chances for BMW getting some money from SAAB Parts is minimal, almost zero. There is no logic in their claim, and Sweden is not USA where you can stage evidences and impress the jury. But they chosen to fire this shot. They probably anyway have an army of layers rolling thumbs, so why not give them something to work on:-).
    Anyway BMW winning this case would automatically mean end of SAAB parts, since the other suppliers would jump on them like predators.

  22. If you can sue a surviving entity of a bankrupt group, for an unpaid invoice from a different part of that group, then by the same argument, Spyker could be held liable.

    It wouldn’t surprise me if a number of preemptive lawsuits get filed against them, just in case they did prevail against GM, and got a windfall.

    This could very easily just turn into a whole mess of suits and countersuits

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