Death In Trollhattan – Saab and Insolvency

In reaction to yesterday’s negative press about an appointment being made at bankruptcy court, NEVS managed to convince the petitioner to withdraw his claim. That’s good news.

NEVS’s anaemic PR division followed this up with a press release:

Nevs hereby clarify that the company is not insolvent. The company does not have enough liquid cash as today to pay all outstanding debt but Nevs’ assets are larger than its debt. Nevs today cannot say exactly when, but Nevs’ suppliers will get paid.

During the summer, the dialogues with the two major vehicle manufacturers have continued and developed in a positive direction. It is a thorough evaluation process that is still ongoing, and the discussions have not been finalized yet.

After the funding is secured, and that Nevs business plan is updated together with its new partners, Nevs will be able to make the decision on when the Trollhattan factory can resume its production.

The company whose representative filed a bankruptcy petition has informed Nevs today that they will withdraw the case after the information they have got regarding the ongoing dialogues.

A few quick thoughts on this:

“Nevs hereby clarify that the company is not insolvent” being followed by the words “The company does not have enough liquid cash as today to pay all outstanding debt….” is more than a little strange. It changes marginally from place to place, but in general terms, insolvency is where your debts outweigh your capacity to repay them as they fall due. It requires liquidity, not promises or claims about total assets. NEVS may claim solvency in this press release but such a claim has to stand up in court if/when they’re pressed to prove it.

Here’s a question someone in Sweden should be asking – Why doesn’t NEVS protect itself from creditors by going into Reorganisation, as Saab/SWAN did more than once a few years ago?

“Reorg”, you might remember, is the rough Swedish equivalent of a Chapter 7 11 bankruptcy in the US or ‘Voluntary Administration’ here in Australia, where the company gets some protection from creditors and can reorganise its business in order to maintain solvency and become profitable. The answer, I believe, is that if you go into Reorg you’ve got to prove to the court that you have a realistic chance of coming out of Reorg and trading successfully. NEVS’s ability to prove that would be severely limited because right now, they don’t have a finished product to sell nor a distribution network to sell that product into.

Consequently, I’ll take a stab and say that NEVS quite possibly exists right now only because of the good graces of its creditors. KJJ has already liquidated plenty of assets in China and elsewhere to keep the doors open this long and his capacity to keep doing this must be limited at this point.

And another question, on a slightly different matter….. Unless there’s going to be a three-party effort going on here – NEVS, DongFeng and Mahindra all working together – why is NEVS still in discussion with two potential partners?

This has been going on for months now and it will likely go on for many, many months more if NEVS still hasn’t got past the point of isolating one partner to deal with (if indeed one partner is the intended goal). If I were a creditor, I’d want a little more information as to exactly where things are at. I’d want a more realistic timeframe as to when I was going to get paid. If the goal is to secure a single partner/buyer/investor and NEVS is still sorting out who that might be, then I wouldn’t be planning on recovering my debt any time soon. Maybe the creditors have got that info from NEVS, but to the general market it looks like very little is happening in the way of progress – again, this is down to the anaemic PR department at NEVS.

We continue to wait and see.

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  1. It’s not good whatever it is, but I think this press release is only arguing about language, and doing it poorly, I might add.

    Insolvency I take to mean the same thing that you do — inability to pay debt owed due to lack of liquid capital.

    The word here in the US for debts exceeding net assets would be bankruptcy.

  2. Swedish ‘reconstruction’ is the equivalent of chapter 11 in the us. Chapter 7 is when a company gets liquidated.

    To get that sort of court protection from their creditors, they would have to go in with some sort of plan to prove to the court that there is a solution to their liquidity issues in the near future.

    A court isn’t likely to put much faith in essentially what their argument is , ie ‘ you all will get paid, we just don’t know when’

    NEVS best bet is to keep talking to their creditors, and stay outside the courts unless the absolutely have to. If another creditor puts in a bankrupcy petition and does not withdraw it, then they will be forced to try to do this. They will need to produce a trial balance and prove that half their share Capital still exists. Otherwise the companies board members and directors become possibly personally liable.

    If you cast your mind back to 2011, VM did a recapitalization ‘sleight of hand’ by revaluing upwards the properties. Otherwise saab back then risked falling into that trial balance trap.

    One thing to watch for is for some of their board members/ directors to start resigning. Interestingly, NEVS legal guy , Lars Zetterberg, is himself a bankrupcy lawyer. He was the court appointed receiver in a Swedish co that I used to part own. ( I had got out before it went belly up! )

  3. And while this happens, they cannot pay attention to bringing competitive cars to market nor re-establishing a strong dealer network that will be needed for the long-term future. As you noted the other day, Saab’s rebirth requires money and a plan. They are going to struggle when the cash is lacking so.

  4. Purchasing decisions are a function of , among other things, consumer confidence. Who in their right mind would entertain buying ANYTHING from this organisation as it currently stands?

  5. ……. the stern of the Titanic is standing upright in the water …. pausing as if to take aim …. ready to slide beneath the waves to its final resting place …… moments seem like eternity in these tense few seconds …. but the inevitable resolve is now unstoppable …… the Titanic will disappear forever … only but a memory will be left and some sodden flotsam that over time will become cherished souvenirs ……The end is nigh ……

  6. Regarding KJJ I think it’s a little bit strange that he hasn’t been seen or heard from at all for a fairly long time.

    I read something along the lines that KJJ might be in trouble in China due to a accident at one of his companies. I think it’s not totally uncommon that people in charge of companies in China to get punished if things go wrong, like for example end up in jail.

    It might be a wrongful twist on the rumors behind why Qingdao fell through as a financier but in my mind the question remains, where is KJJ ?

    All of this is rumours and hearsay and my own speculation so I have nothing at all to back it up with, just to be clear on that point !

    1. KJJ is conspicuous by his absence but giving him the benefit of the doubt, one could assume he’s very busy in negotiations.

      With regards to accidents, I haven’t heard anything about an accident at one of his facilities, but I did hear a while ago that there was a major accident in Qingdao. A pipeline blew up and killed 62 people. A number of the city authorities were ‘disciplined’ as a result and that may well be the reason why the city pulled out of its commitments towards Saab/NEVS. My guess is that the people who committed to Saab simply weren’t there anymore and the ones who replaced them had different ideas. This is just theorising on my part, but the accident/explosion did happen in November 2013.

      1. So a pipeline explosion in China killed National Electric Vehicle Sweden (in Sweden). Depressing…

  7. “KJJ has already liquidated plenty of assets in China and elsewhere to keep the doors open this long and his capacity to keep doing this must be limited at this point” please expand as kjj and his companies appear to be very good at keeping other assets-net worth out of sight. I always viewed kjj as a front for some government organisation but alas cannot prove this. Chinese companies working here in WA are always concerned with saving face and in some instances have spent billions to do so.

  8. The SAAB name continues to get dragged through the mud.

    I hate to watch but I can’t help myself.

    Not sure if it’s helping or hindering used SAAB values. I know that anything decent has mostly been snapped up and in loving hands. Try finding a TX or Aero on the Oz market.

        1. @turbin and its a good one, I believe the owner also owned one of the Hirsch 9-5’s that were brought into Oz in 2003.

          1. It sounds great.

            Always have to keep one eye on these in case somebody hands me a bag of cash mistaking me for a Liberal MP…

          2. Points off for having no photos of the actual car. They’re all press photos (except for……)

            Points added for the Darth Vader photo 🙂

  9. see the car a few times a week on my work commute, have yet to see it dirty, it just looks and sounds hard…

  10. NEVS approach to media is perplexing. Fully understandable that they never wanted to air their laundry in the open but now has come the time to put the message out there that they are still alive and kicking. Bad media just feeds more bad media, and even the smallest little announcement about developments that could be considered even remotely positive would go a long way. A very long way.

  11. Andrew: Agreed. Their lack of fundamental public relations skills has always been dumbfounding—-truly astonishing that any of them got that far in business without understanding the rudimentary business practice/customer relations etiquette of press releases, interviews, PR. It’s amazing how poorly they performed in that aspect, not to mention so many others over the last two years.

  12. From what I’ve read elsewhere, NEVS is in discussion with two potential “partners” as part of an eventual joint effort, not to narrow two suitors eventually to one. Hopefully, they will not be equal partners. At the end of the day, Saab needs a strong hand on the wheel and an established international company….that’s Mahindra. Dongfeng would help develop the Phoenix platform and use it a basis for some of their own vehicles (not Saabs). And NEVS, they’ve shown they don’t have much to offer, so they’ll be lucky to get some crumbs and KJJ maybe can get out with his undershirt, if not his shirt.

    1. I can not belive NEVS owner put all that cash into NEVS without having anything to offer.
      It is a massive sum of money spent so far.
      They are in deep trouble, that’s for sure. But still, pouring that kind of cash into a startup must mean they at least have knowledge of what stuff NEVS got there hands on.
      Battery tech? A major china gov deal? Electric infrastructure (to make supetchargers to there own brand)?
      I don’t know, but if KJJ did not have anything else when Quingdao left the party, why keep pouring the monay into NEVS?

  13. Just a minor heads-up… According to, NEVS will show the electric version of the old 9-3 to the public in Trollhättan tomorrow (Wednesday). They have not shown this before, have they…?

    1. This is the “new”, Nevs version.
      It’s not what Saab developed prior to Nevs buying them. Most likely it’s not with a face lift, my guess is that it’s one of the four test versions they made as test vehicles.
      They have not been displayed publicly before except maybe unannounced on a road for testing.

      Sounds to me like a desperate attempt to get positive publicity, perhaps a couple of months to late. They should have done this month’s ago…

    2. Not a good communications strategy to package good with bad news especially if they want to make an impact with the new electric car at some point… I hate to say it but this NEVS team has been pretty amateurish right from the start… However I wish them and the Trollhattan employees them the best of luck.