In an interesting panel discussion yesterday at the National Automotive Finance Association conference, Larry Young, a partner at the Houston law firm of Hughes Watters Askanase LLP, proposed that “rejected” Chrysler dealers looking to forestall their terminations should “file their own Chapter 11.”
The “automatic stay” that is part of the bankruptcy filing prevents all entities from exercising control over the estate. If the dealer files, then there are two parties in bankruptcy, each with an automatic stay. It becomes a standoff, he said, adding that “the hope is that the dealer can possibly outlast the manufacturer in Chapter 11.”
At the least, it might help dealers — who were given a June 9 deadline to shutter operations — buy some time to negotiate or liquidate.
Aside from that, “there’s nothing else dealers can do,” he said.
JJ, I am merely contrasting the situation in the 80’s with the current situation. It was one company with a singular leader. In my mind it makes the current situation quite different from back then. The financing package took months to put together with only Chrysler involved.
My only point is that there is no road map to follow as the Chrysler situation in the 80’s cannot be used as template for the current crises in any way that I can see.
Comparing Iacocca with other company leaders is another story. There are degrees of strength. they all have different skill sets. Iacocca’s strength was his charisma. Charisma is difficult to measure. The guys running the car companies today don’t have anyone with his charisma and leadership ability, in my opinion.
We have seen many companies without strong leaders continue on. Before they fail the “leader” usually departs with a golden parachute and are replaced by another. There have been plenty of companies with complete buffoons at the helm that have thrived in spite of themselves.
Unfortunately some dealers might have no other options but to file
Let’s hope they can buy some time and develop a strategy to fight.