As many of you know, on December 19, 2011, Saab Automobile AB and affiliated companies filed for bankruptcy in Sweden. The company issued a bulletin to its dealers that same day, announcing that it immediately suspended processing and payment of all claims, and it is suspending warranty coverage on all new Saab vehicles. What does this mean for dealers? Every dealer’s situation is different, and each dealer will have to evaluate its own circumstances based on consultation with an attorney.

On December 21, GM issued a memorandum to its US GM Dealers that also have a Saab Franchise Agreement, regarding reimbursement to Saab dealers for warranty repairs. In that memorandum, GM assures its dealers that it will stand behind warranty obligations for Saab model years 2006–2009 (the period of time that Saab vehicles were marketed by GM in the US). The memorandum explains how dealers should submit their warranty claims to GM.

Several other questions remain unresolved. For example, who will honor warranty obligations on Saab vehicles built after the GM bankruptcy? Will parts be available to perform warranty repairs? What will happen to dealer inventories and will Saab be required to buy them back? How do dealers handle flooring pressures as a result of diminished market value?

If you are a dealer affected by the Saab bankruptcy, we recommend that you do not navigate these issues alone. It is highly advised that you obtain an attorney knowledgeable in these areas to assist you in putting the best plan together for your circumstances.

Arent Fox is continuing to monitor this case, as well as other cases involving bankruptcy in the automotive industry. Please contact Aaron H. Jacoby, Christian J. Scali, or the Arent Fox attorney with whom you work with questions.