National Debt Relief Program

Saab Bankruptcy

General Motors confirmed Saab’s days as a part of the Detroit-based company are numbered. The Swedish brand filed paperwork with courts in its home country for reorganization that would lead to its independence. This self-managed reorganization is analogous to the U.S. Chapter 11 bankruptcy process, and would lead to the establishment of an independent entity based in Sweden. In order for that to happen, however, GM needs to line up financing for the new company, which may be problematic. Automotive News reports that as much as $1 billion may be needed to make Saab sustainable on its own.

GM plans to concentrate Saab’s engineering, design and manufacturing operations back in Sweden. The brand plans to launch three new products between now and mid 2010: the new 9-3X, 9-5 and 9-4X. The first two are already set to be produced in Sweden, but the new 9-4X crossover was scheduled to be built in Mexico alongside the Cadillac SRX. The Swedish government has already rejected a GM request for funds, so the money will have to come from somewhere else. The official press release from GM can be read after the jump.

Saab initially indicated that there were nearly 20 parties interested in purchasing the bankrupt Swedish automaker. The company then reported that the number had swelled to 27, but an unnamed source tells Bloomberg that there are really only half a dozen serious bidders under consideration. Interestingly, that number does not include any rival automakers.

According to CEO Jan-Aake Jonsson, the automaker needs to sell 130,000 vehicles a year just to break even and doesn’t expect to break the 90,000 mark for at least the next two years. Fret not, there’s a plan in place that Saab hopes will guarantee the path to profitability, which includes four new models within the next 18 months that emphasize safety and the firm’s trademark turbocharged engines.

Crucially, Saab also expects former parent General Motors, which has much bigger issues of its own to worry about at the moment, to write down Saab’s $1.15 billion dollar (9.6 billion kronor) debt to the American automaker by 75%. Yet many are hedging their bets that the Saab bankruptcy action will lead to a leaner, meaner automotive company.