Chapter 11 for the Big 3?

Chapter 11 for the Big 3?

PostBy: stockingfull On: Tue Nov 18, 2008 10:07 am

This is serious.

On the one hand, people say that nobody will buy a car from a "bankrupt" company.

But "bankrupt" is an antiquated notion, since Chapter 11 of the Bankruptcy Code provides for "reorganization" in which debt and obligations are "restructured" so as to give the debtor the best chance of coming out of bankruptcy and succeeding. And, as we've seen with many airlines, for example, not all of their promises get "broken" in bankruptcy, so there's no real worry that warranties won't be honored or parts become unavailable, since those would be among the most important things to protect in order to give the companies the best chance to emerge from bankruptcy protection.

So why pour $$$ into Detroit without getting something substantial in return, like new mgmt and/or restructuring of the corporate healthcare benefits, etc.?

In fact, I think it presents an ideal opportunity to use some of that money to move toward universal healthcare (which is particularly hurting Detroit, since it's a gov't-provided benefit everywhere else in the world where cars are built, so an unfair competitive burden on the Big 3 to carry privately).
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Re: Chapter 11 for the Big 3?

PostBy: billw On: Tue Nov 18, 2008 10:24 am

I think any company, banks included, that has to be bailed out with taxpayer money should at the very least have every one of their top management fired without their severence package. It's called accountability, something every one of us here live with daily. They screwed the pooch with their poor business decisions so they should pay a price. Not a dollar of dividends should be paid until every penny of bailout money is repaid in full with interest. Buying stock is a calculated risk. In good times stockholders are rewarded so in bad times they get to pay the price also. I'm all for helping our corporations survive and thrive but I'm not for giving them a handout with no strings attached. Nothing will change if we do that. The fat cats will get fatter at our expense and the companies will continue to suffer.
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Re: Chapter 11 for the Big 3?

PostBy: Richard S. On: Tue Nov 18, 2008 10:25 am

I'd agree let them sink. This bailout package was originally sold to the U.S. as bailout for the banking industry which cannot be allowed to fail. Now we have a conga line of companies lining up to get assistance and the American taxpayer gets fleeced yet again.

I'm not anti union but when you have some guy bolting seats into car for $50+ an hour you have a problem. While there at they can fire all the execs that are just as much to blame if not more for putting them into this position in the first place. Just throw them out the door, no golden parachute.

The American people are fed up with politicians, big business, and the rest of the crap they have to put up with. The next for years are going to be quite interesting to say the least and I think you'll see a major upheaval in the politics and the way big business does it's thing. People are simply not going to tolerate it anymore and I think we'll come out of these times stronger than ever.
Richard S.
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Re: Chapter 11 for the Big 3?

PostBy: stockingfull On: Tue Nov 18, 2008 10:45 am

Speaking of unions, anybody heard of "card-check," or the "Employee Free Choice Act?"

How does strengthening the unions right now do anything but make matters worse? Detroit is Exhibit A, isn't it?

And, yes, you're reading that right: I am saying the above things.
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Re: Chapter 11 for the Big 3?

PostBy: vtec350 On: Tue Nov 18, 2008 10:54 am

Letting the "big 3 " claim bankruptcy would be the best for them. Like you said, they would be able to "restructure" their contract and it doesn't mean that all employees will lose their jobs. It's the unions that are crying that the country can't function without the big 3, of course they're the ones saying this because they know they will be the ones out one their a**. :lol:

GM is spending $1,600, Ford $1,500, Toyota under $300 on health care per vehicle, can you see part of the problem already? The other problem is the amount of dealers in 1 area. Here we have 5-6 different GM and Ford dealers where as Honda and Toyota have only 2, there's no need for that many in such a short distance.

Now they're saying they need this money so they can get their production of alternative fueled cars moving, they should've been doing this 30 years ago! GM's coming out with another Hummer :mad: , do we really need another version of this ? I'd give them more money but on 1 condition. Every CEO has their resignation on my desk and all they get is a boot in the A** on their way out, no bonus, no golden parachutes...GOODBYE :out:

They said the same thing about the airlines,we lost Pan Am, but we got South West airlines. The markets need to correct it self instead of pumpimg more money into a false economoy.
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Re: Chapter 11 for the Big 3?

PostBy: stockingfull On: Tue Nov 18, 2008 11:02 am

Not that I agree (at least at this time), but the unions would say that "Southwest Airlines" and others like it came into being because of the difficulty in organizing their workforces, and that the equalizer, instead of restructuring union benefits, would be to make it easier to unionize Toyota, Honda, Saturn, Hyundai and all the rest.

Wonder how all that'll sell with the new President....
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Re: Chapter 11 for the Big 3?

PostBy: Devil505 On: Tue Nov 18, 2008 11:05 am

Chapt 11 all the way!

The only industry I want my tax dollars to buy is the oil industry...Hostile Takeover! (for national security purposes)
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Re: Chapter 11 for the Big 3?

PostBy: Horace On: Tue Nov 18, 2008 2:48 pm

Everyone on the site has either been affected or known someone who was affected by the ineptitude, incompetence, and arrogance of senior management of big business. I know that it happened to me. Our CEO was an utter moron and ran a good company into the ground. About 220 people lost their jobs. She lost her job as well, but walked away with more money than most will make in their lifetime.

Let the big 3 file for Chapter 11 and boot every exec out the door without their parachute. Let them try to find jobs again, just like everyone else. Let them see what it feels like to work somewhere for two decades and then have to start over somewhere else.

I also think that every shareholder of every publicly traded company - no matter how well that company did - should demand that their executives refuse their bonuses as Goldman Sachs did yesterday. This is a company that was paying close to $100 million per exec in bonuses two years ago, and they did okay this year. We used to hear from our execs that exec bonuses are a way to recruit and retain talent at the top. I understand that. But if NO ONE is giving bonuses, then you have a level playing field and that argument is dead. If your company has laid off or is planning to lay off 3,000 employees (Pepsi Bottling) then the exec bonuses should definitely go. It's not enough to say "we're doing poorly because the economy sucks." Practically everyone is hurting right now and they need to take it on the chin like the rest of us.

Take the bailout money and help out every small/medium business that's close to going under. Help three companies or a sh*tload of smaller ones. Which is better?
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Re: Chapter 11 for the Big 3?

PostBy: SMITTY On: Tue Nov 18, 2008 8:53 pm

This whole situation is just unbelievable to me ...... I can't understand how any of the "big 3" can be going under. Especially today, the cars/trucks they are making are just amazing -- they look great, reliability is right there with the foreign models (wasn't true in the 80's or some models in the early 90's) , I could go on & on......

I was one of those people who swore I would never EVER buy a new vehicle -- there were no models that appealed to me enough to justify a massive monthly loan payment, huge yearly excise tax bills, & ridiculous insurance payments. I laughed at all my friends -- "yah, nice truck, but how's those payments??? Mine are -0-!!" (Back then I couldn't afford one if I wanted anyway.....)

That was until I sat in my '07 Chevy Silverado at the dealership. It was like this truck was built to my specs -- everything was PERFECT! Then I took it for a test drive. After the tachometer swung past 4 grand, I said SOLD! I had no plans that day to buy anything!! We just went to look. After selling a bunch of stuff around the house, & factoring in the money I'd get selling my old truck outright rather than get raped on a trade, & a little negotiating, I drove that bitch home 3 days later!! :up: First new truck ever. Now has 25K miles & I still love it! This is why I can't understand why people buy foreign vehicles, but then again, I can't understand how anyone could vote for a Democrat........I have to face the fact that I'm a dying breed -- the last of my kind. Once I'm gone, there will be no next of kin to pass on all I have learned about surviving with little money in a land of the wealthy. It'll be just as well, because in my opinion this country, sadly, has a bleak future ahead -- not a place for my kids to see... ( gees, now I sound like a Democrat with all the gloom & doom! :cry: :sick: )

As much as it would honestly break my heart to see GM go down ( I've owned only one Ford my entire life ), I have to echo what I heard an expert in the auto industry say today: "Let 'em fail, & from the ashes will arise a stronger, better company".
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Re: Chapter 11 for the Big 3?

PostBy: Paulie On: Tue Nov 18, 2008 9:02 pm

Well, I can feel for the previous sentiment. The problem is if ANY of the big three go down, the trickle down effect
will be more expensive to the gov. than any short term finance. So, yes loan them the money, no sweet heart deals, and put
a few strings on it.. The foreign car makers are loosing money now too, they have more cash on hand and lower overhead.
We need to even the playing field too. Mirror the trade laws of a partners. How hard is it to market US cars in Japan?
The laws there are such, almost impossible. Play fair, or go play some where else.
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Re: Chapter 11 for the Big 3?

PostBy: traderfjp On: Wed Nov 19, 2008 12:30 am

I like American trucks and have always been a fan. Until the latest price surge in oil they were big sellers too. However, American made cars still suck. They are finally making cars with some style but the interiors and reliability still suffer. My friend just bought a Cadillac and I couldn't believe how cheap it looked inside compared to my Volvo. I love the exterior styling of the car but that's about it. Let them cut back and consolidate their business. If they go bankrupt so be it and we can put the unemployed back to work fixing bridges.
Last edited by traderfjp on Wed Nov 19, 2008 7:59 am, edited 2 times in total.
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Re: Chapter 11 for the Big 3?

PostBy: Freddy On: Wed Nov 19, 2008 6:54 am

On the news last night it said the big three together and Japan each account for about 30% of vehicle sales. The big three have 7,000 dealers, Japan has 1,500.

My wife & I drove american cars for 35 years. I still drive a Ford Van. We'd buy a 3 yr old car & drive it til it died, then repeat. Last year, for the first time ever, we bought a brand new car. A Honda CRV. Why? Because we couldn't find anything built in the USA that compared. We test drove the Ford Escape.. top heavy, stiff ride, loud, powerless, The Saturn Vue, drove nice, but heavy, lousy fuel milage, too expensive. Chevy doesn't have anything that's within 500 pounds $5,000, or 5 MPG.
I'd like to say to save the big three they need to tighten their belts & build better products. But.... Didn't we say that 18 years ago?
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Re: Chapter 11 for the Big 3?

PostBy: stovepipemike On: Wed Nov 19, 2008 10:15 am

The Big Three still are trying to make us believe that because it is American designed and built it simply is the best.Even at the hearings they are trying to use scare tactics to get at taxpayer dollars. Well,that "Big Three Thinking" singing canary is off the perch and lying in the bottom of the cage.I feel bad about the scores of people that just go to work and trust the ebb and flow of their very lives to the management of the Comanny by the Fat Cats At The Top. Just like we have heard in the recent campaigning ,It Is Time For Change. Need a different canary now. Need new slimmer cats also!!
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Re: Chapter 11 for the Big 3?

PostBy: stockingfull On: Wed Nov 19, 2008 11:47 am

I'm with Freddy and Mike. Detroit -- with notable assists from Congress and the oil industry -- has been building overweight, underengineered, gas-guzzling crap for at least the past 20 years; they haven't earned any goodwill at all by their foresight or product decisions, and it's hard to shed tears for the UAW members and their fat contracts, which are another giant piece of the problem.

Just look at their "marquis" models now: a 550 HP Caddy CTS-V? The new/old Camaro? Ditto Hemi Challenger? The new Dodge trucks? Even if the big iron is good (and I'm not saying it's "bad" -- I've seen the race version of the CTS-V run and it's amazing), the fact remains that it's just incredibly stupid product planning in the new energy age we're in. If people are getting tired of losing their earnings at the gas pump, HELLO, they're not looking to buy an updated RWD, 15 MPG garage-queen Camaro (no matter how many times the old one got them laid). While the rest of the world's makers have been doing their homework, Detroit has just lost its way, plain and simple.

Plus, they can't get out of it on their own. Many states prohibit (or make very difficult) the closing of surplus dealerships. The companies can't just walk away from the union contracts they're literally welded to.

So here's what I think is going on: Both management and the congressional delegations know there just aren't the votes to get the money from the Feds without a bankruptcy, so there's this big dance going on now, where the "home team" puts on a big show of need, but then Congress won't be able to break the GOP filibuster against it. So the money won't flow this week, and one or more filings under Chapter 11 will be coming early next year. And then the bankruptcy court will exercise its power to make the tough calls which management hasn't been willing or contractually able to make and the foundation of a solution will be in place. It will be no problem for them to address the warranty and parts concerns people will have; in fact, the bankruptcy court will be in a better position to support those concerns than the companies just taking handouts now are.

That's exactly what Bankruptcy Courts do every day. This will just be much bigger, and it may be the most urgently needed set of bankruptcy filings in history.

The UAW will be screaming. But maybe that's a good measure of how important the medicine is.
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Re: Chapter 11 for the Big 3?

PostBy: ErikLaurence On: Wed Nov 19, 2008 11:59 am

Someone on the committee should ask the execs how they got to DC to testify.

I'm guessing they didn't fly commercial. I'm guessing they flew private. Flying on a $40 million private jet that costs tens of thousands of dollars a day to operate seems ironic for execs begging the taxpayers to bail them out.

IF we bail them out, all auto execs should be forced to fly coach.
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