(CN) – Saab cannot blame its bankruptcy on a financing deal with a Chinese automaker that General Motors sank for legitimate business reasons, the 6th Circuit ruled.
General Motors torpedoed the deal as part of its automotive technology license agreement (ATLA) stemming from its sale of Saab Automobile to Spyker N.C. in 2010.
As part of the minority interest it retained in the Swedish company, GM prohibited Saab from transferring the rights to GM intellectual property without GM’s consent.
Saab sought to weather grave financial difficulties in 2011 by partnering with Zhejian Youngman Lotus Automobile, but GM refused to approve any agreement that involved Chinese control of its technology.
Though Saab tried to restructure the agreement so that Youngman would have outside control only over Saab technology, not the legacy GM technology, the deal fell apart on the day Youngman was set to execute it.
GM spokesperson James Cain at the time explained: “Saab’s various new alternative proposals are not meaningfully different from what was originally proposed to [GM] and rejected. Each proposal results either directly or indirectly in the transfer of control and/or ownership of the company in a manner that would be detrimental to GM and its shareholders. As such, GM cannot support any of these proposed alternatives.”
Youngman swiftly pulled out of the deal, and Saab filed for bankruptcy liquidation two days later.
Saab filed suit in Flint, Mich., claiming that GM “waited until the last minute to spook Saab’s prospective business partner and contentedly watch[ed] as Saab went into liquidation.”
A three-judge panel of the 6th Circuit affirmed dismissal of the case Friday.
“In its public statement, GM openly cited its concern that the sale to Youngman would be detrimental to GM and its shareholders as the basis for not consenting to the Framework Agreement,” Judge Eugene Siler wrote for the court in Cincinnati. “GM reiterates on appeal that it was concerned about who owned Saab while using GM technology and, more broadly, who would receive the benefit of Saab’s use of GM’s technology, brand, and goodwill. Because GM was motivated by legitimate business concerns about the Framework Agreement, its statements do not constitute improper motive or interference.”
In finding that Saab mischaracterized GM’s objections to the agreement as last-minute, the court noted that GM had in fact opposed the deal with Youngman from the outset.
GM’s statements also were neither malicious nor intentional, given that Saab’s argument is that GM misinterpreted its restructured agreement with Youngman.
“GM’s statements were made within its contractual consent right and concerned legitimate business reasons for not consenting to the Framework Agreement, and thus cannot constitute per se wrongful or malicious acts,” the ruling states. “Even if GM had misinterpreted the ATLA and GM did not actually have the consent right that it claimed regarding the Framework Agreement, Plaintiffs’ argument still fails as a matter of law because GM’s statements would have at most amounted to a mistake.”
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