Sen. Tom Coburn pointed out a very important issue this morning. Cerberus Capital Mgmt owns a bit over 80% of Chrysler. If there is any way to save that company, they will figure out a way to do it. They have billions on the line if Chrysler goes down. They'll sell other of their assets in stronger companies in order to get the money to protect their investment in Chrysler. They can do that. That is their option. It's a simple business decision.
If Cerberus chooses not to save it's own car company, why should we. If they do not believe it is salvageable and are willing to loose their billions of investment, what makes us think the government can do better? On this one issue alone Chrysler should be completely out of consideration.
Thursday, December 11, 2008
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7 comments:
If Chrysler cannot get union concessions, it may turn out to be the stupidest investment made in recent years.
And I work for a Dodge store. It's an excellent product, but Chrysler LLC is burdened with the same nonsensical union arrangements that GM and Ford have.
We are too simplistic though when we wag fingers at GM, Ford and Chrysler. There was no way they could have stood up to outrageous union demands with the political backing that unions had in this country. Now we have three companies in a strategic industry that are paying the price of being turned into welfare platforms by proxy. And we blame them.
And Schummer and Obama think the unions have gotten too weak and so plan to institute card check to strengthen them. Kind of amazing isn't it?
I would prefer to let the big three go bankrupt, but Barney Frank has brandished his sword telling them they cannot modify the most critical feature of their finances, their union contract.
That bankruptcy might go 7 and drive me likewise into bankruptcy, but it would be the right thing to do. It can't be done because of an overwhelming democrat majority and their unqualified support of the unions.
The loans the big three want are really loans to support their union obligations. Thus they are a payoff from democrats to their constituency.
Excellent insight!
Hugh, what are your Dodge cohorts thinking about this whole thing? What are job prospects if your dealer goes under?
The store is "dualed" with a Hyundai Franchise, so theoretically, I would still have a job at a smaller dealership.
I dunno Crusty. This place could easily go out of business as well. If Chrysler opts to go bankrupt that could catch us at the wrong moment in terms of what we owe them, and they owe us and put a great strain on the car dealership. I also don't know how LLC's go bankrupt without taking the parent entity down with them.
In the case of my employer, the dealership is an LLC, but it is an LLC front for him personally, otherwise it would be seen as a sole proprietorship. In the case of Chrysler the LLC is a legal storefront for Cerebus Financial management (or something to that effect). Cerebus is closely held and a creation of big money guys and gals who make investments. I don't know enough about bankruptcy law and LLC's to know whathappens.
I believe an LLC bankruptcy always depends on how the debt is collateralized. Typically employees and most vendors have a relationship only with the company, not the individuals of the LLC though there are exceptions. Direct debt holders (bank loans, personal loans, etc) may be purely with the company, the individuals or a combination.
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