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Posts Tagged ‘auto bankruptcy’

Delphi Finally Out of Bankruptcy – But Now What?

Giant supplier hopes to rebuild but obstacles remain.

by on Oct.06, 2009

Despite a successful record as a turnaround specialist, it's taken Delphi Corp. CEO Steve Miller four years to get the auto parts company out of Chapter 11.

Despite a successful record as a turnaround specialist, it's taken Delphi Corp. CEO Steve Miller four years to get the auto parts company out of Chapter 11.

When both General Motors and Chrysler blasted through the courts in mere weeks, it might have seen like the bankruptcy process was being completely transformed to help the auto industry rebuild.

But if so, somebody forgot to alert Delphi Corp., the giant supplier and former partsmaking arm of GM that is today wrapping up its court-protected reorganization – but only after a grueling process that has dragged on for almost four years to the day.

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Plenty has changed since Delphi first filed for Chapter 11.  The company has closed or sold off an assortment of operations, giving the heave-ho to thousands of workers, while most of those still on the payroll will be making significantly less than they did before.

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Q&A: General Motors CFO Ray Young

Full transparency from GM's numbers man.

by on Jun.09, 2009

GM CFO Ray Young huddles with former Chairman Rick Wagoner during a Washington hearing called to discuss the automaker's request for a federal bailout.

GM CFO Ray Young huddles with former Chairman Rick Wagoner during a Washington hearing called to discuss the automaker's request for a federal bailout.

Call it trial by fire. Last year, as General Motors began the meltdown that ultimately led to its bankruptcy filing, last week, senior company officials frequently sat down with reporters to outline the latest cutbacks in jobs and production. There were the familiar faces, like former CEO Rick Wagoner, as well as the man who replaced him, in March, Fritz Henderson. But less familiar was Ray Young, the traditionally soft-spoken veteran who was appointed Chief Financial Officer, in March 2008.

It was clearly not a great time to be counting the beans at the fast-failing automaker, but it puts Young in a key strategic position, now that GM is shedding billions of debt, half of its North American brands and more than a third of its dealers under a court-managed restructuring largely crafted under the heavy hand of the Obama Administration.

A 23-year GM employee, Young was born in Guangzhou, China, emigrating to Canada as a youngster.  After earning an MBA at the University of Chicago, in 1986, he signed on with GM and has followed an increasingly familiar career path that included the GM Treasurer’s office, in New York, and several stints overseas. Young spoke with TheDetroitBureau’s Paul A. Eisenstein about opening GM’s books to its shareholders – the American taxpayer – the lessons learned in bankruptcy, and the threat of a GM boycott by the right wing.

TDB: When the White House forced out CEO Rick Wagoner, in March, there seemed to be a change in attitude by GM towards accepting a bankruptcy.  Is this accurate?

Young: It’s hard to say when it became more evident. Time worked against us. The Obama Administration set some pretty tough targets. In March, $26 billion worth of debt had to be converted into equity.  If you recall the original, December 31st agreement, Treasury had called for a two-third reduction.  When President Obama increased that to 90%, that increased the risk that bankruptcy would have to be the tool to reach those objectives.  So, March 30th, the stakes got raised.  Without being able to restructure the unsecured debt, we would not be able to restructure outside bankruptcy. (more…)

Help Wanted, $1 A Year

Can Chrysler attract high-priced talent on a strict budget?

by on May.05, 2009

Can you believe they paid me this much to LEAVE Home Depot?  And now, outgoing Chairman Bob Nardelli is earning just $1 a year.

Can you believe they paid me this much to LEAVE Home Depot? And now, outgoing Chairman Bob Nardelli is earning just $1 a year.

Help Wanted: Brilliant, visionary, experienced leader willing to put in countless 24/7 days resuscitating bankrupt manufacturer.  Must be thick-skinned, cool under constant fire and already financially independent.  Willingness to work for $1 a year a definite plus.  Please call Tim Geithner at the U.S. Treasury Dept. for more details.

While you might not see that ad in your local classifieds, it pretty much fits the basic guidelines of what Chrysler will likely be looking for, if and when it emerges from Chapter 11 reorganization.

The automaker’s current CEO is already working for that miniscule amount, Bob Nardelli volunteering to take a mega-million-dollar cut, late last year, when the automaker went to Washington searching for a federal bailout.  Before you begin feeling sorry for Nardelli – who says he’ll stay with the automaker until it’s wrapped up the bankruptcy process – recall that his parting gift when leaving his job as chairman of Home Depot, a few years back, was a fluffy golden parachute worth $210 million.    (more…)

What Next, Chrysler?

Emerging from Chapter 11 may be the easy part.

by on May.01, 2009

Soon to be ex-ceo, Bob Nardelli, left, and soon to be ex-president, Tom LaSorda

Finding replacements for CEO Bob Nardelli (l) and President Tom LaSorda (r) will be among the challenges facing Chrysler's new board.

And now what?

In his news conference, on Thursday, President Barack Obama suggested that despite forcing Chrysler LLC into bankruptcy, the company’s future is bright. “The necessary steps have been taken to give one of America’s most storied companies a new lease on life,” he declared.

But in a separate background briefing, top White House officials tempered their optimism with the recognition that this is all uncharted territory. There’s absolutely no way to guarantee that things will go smoothly in bankruptcy court.

Recalcitrant lenders aren’t the only ones who might try to derail what one senior official described as a “surgical” process meant to be completed in 30 to 60 days. Dealers, whose ranks could be trimmed by two-thirds, from 3600 to less than 2400, might also resist a rapid emergence from bankruptcy.

And with Chrysler shutting down its entire assembly network until then, even surviving dealers could wind up short of product, further weakening the automaker’s balance sheet.

Subscribe to TheDetroitBureau.comOkay, so let’s play a what-if game that predicts things do go reasonably smoothly in that New York City courtroom. Then what? That’s the big unknown.

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GM, Chrysler Submit Plans — But Are Key Details Missing?

Threat of bankruptcy needed to force changes from union and bondholders?

by on Feb.17, 2009

GM CEO Rick Wagoner: Alms for the poor?

GM CEO Rick Wagoner: Alms for the poor?

Chrysler and General Motors have submitted turnaround plans to the U.S. Department of Treasury that will determine the fates of ten of thousands of blue and white collar workers worldwide. Neither of the struggling companies will discuss details of their latest plans until late Tuesday after the stock market closes.

Stay tuned. TheDetroitBureau.com will have updates as the evening progresses and details emerge from GM and Chrysler.

Given the global economic collapse it is expected that cutbacks will be much more severe than contained in the plans originally submitted to Congress on December 2, 2008. Talks today are continuing with the United Autoworkers Union over health care benefits, but the Union said earlier that an agreement would take more time. It’s also not clear if the deals needed under the loan terms have been reached with bondholders to convert their debt into stock of the companies.

Robert Nardelli, Chairman and CEO, will discuss the plan at about 5 pm. General Motors Chairman and CEO Rick Wagoner will hold a news conference about 6:30 pm to discuss the viability plan being submitted to the U.S. Treasury and to provide an update on the company’s restructuring.

Responding to the Speaker of the House Nancy Pelosi’s letter that was released yesterday, Chrysler said in a statement, “We believe we are on track with our viability plan, which will be consistent with both the request of the letter and the terms of the loan agreement. We look forward to a continued dialogue with the Administration and Congress as we move forward with the process.”

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Will Feds Call in the Auto Bailout Loan?

Obama Administration could force GM, Chrysler into Chap. 11.

by on Feb.12, 2009

Fantasy car, fantasy turnaround?

Fantasy car, fantasy turnaround?

Unless the Obama Administration changes the direction laid out by lame duck President Bush last December, on March 31st General Motors and Chrysler will enter bankruptcy as the Federal Government calls loans totaling $13.4 billion. The forced reorganization and break-up of two tarnished American Icons could be avoided if the companies pay back the loans with interest. This seems impossible given frozen credit markets and annualized vehicle selling rates in the U.S. that dipped below 10 million units annually in January.

At these rates no car company in America is profitable. If the bailout isn’t revised or interpreted liberally, there is no future.

The companies must submit by February 17, 2009, a monthly plan through 2010 and annual plans for the next four years on how they will achieve and sustain the long-term viability, international competitiveness and energy efficiency required by the loans they accepted. Recent actions by Chrysler and GM show a drastic and desperate gutting of the industry is underway. But is it enough?

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