How a "Socialist" State Deals with a Failing Auto-Maker

Saab recently turned to the Swedish courts for protection from its creditors. The company was unable to pay its employees in August and hasn't actually been producing cars since June.

The response from the court in "socialist" Sweden: Take a hike!

Saab and two subsidiaries had petitioned the District Court in Vänersborg, Sweden, on Wednesday for “voluntary reorganization,” a move to gain time for Chinese partners to come through with long-term financing and prevent the legal challenge from unions.

But the court was not convinced by the plans.

Noting that Saab had just undergone a restructuring in 2009, when it was owned by General Motors, “the court did not see sufficient reason to believe that the chances were any better today than they were then,” said Cecilia Tisell, a court spokeswoman.

The court also found that the financing plans of Saab’s parent, Swedish Automobile, relying as they did on Chinese companies that had not yet received Beijing’s approval, were not concrete enough, Ms. Tisell said.

A further consideration, she added, was that Saab’s production lines completely stopped operating in June, and the court believed that even if production resumed, it might be difficult for the company to begin selling cars again.

Wow! Seriously! Let me get this straight. When a firm is consistently unprofitable this is a sign that it should go out of business?!

Thank goodness we live in the "capitalist" US of A. We know better. We know that auto-makers should be kept on taxpayer-funded life support no matter how many times they need to be bailed out; no matter how many decades their failure continues.

HT to Roger Congleton for bringing this to my attention.