The custody battle over Plastech's injection mold tooling just got a lot more complicated. Mlive.com reports that H.S. Die, the company who manufactured Plastech's Chrysler-specific parts tooling, says that it holds a special-tool lien. In theory, the agreement gives them legal priority to reclaim the equipment now that Plastech has entered bankruptcy. (Chrysler is appealing the decision barring the automaker from reclaiming the same tooling.) H.S. Die was surprised to find itself on top of the "unsecured creditors" list; Plastech owes it $9m. H.S. Die has filed a legal notice, arguing its legal right to the equipment– registered with the state of Michigan– as unpaid-for merchandise. If the court rejects the die maker's arguments under this under-interpreted lien jurisprudence, H.S. Die stands to lose millions. If, on the other hand, the tooling is handed back to H.S. Die, Chrysler could find itself in the awkward position of having to work-out a deal with yet another supplier to keep production lines moving. The saga continues…
Find Reviews by Make:
Read all comments
This just keeps getting better by the day – you couldn’t hire a soap opera writer to come up with stuff this good.
The ‘optics’, to use of the vernacular, of Chrysler these days really must be hurting them. Hmmm, let’s see ‘disgruntled, stressed labor’ Check!, ‘supplier difficulties’ Check!, ‘tenuous financial future’ Check!
They’d have to offer an almost outrageously cheap deal for me to buy one of their cars at the moment.
First, it must be made clear that if H.S. Die’s lien is recognized as valid, it will no longer be an unsecured creditor of Plastech, but will be a “secured creditor” by virtue of said lien.
Second, it also stands to reason that if the lien is seen as valid, and if the bankruptcy judge at some point consents to the removal of the tools in question from the Plastech factory, the judge will almost certainly grant them to Chrysler, subject to Chrysler assuming responsibility for the unpaid purchase price, with the lien intact for use against Chrysler in case it does not honor that debt.
Finally, even if H.S. Die is, for some reason, granted physical possession of these tools, the only way to get value for them would be to sell them to Chrysler, because nobody else has a use for them. So Chrysler would get them in the end.
This is a non-ideal solution, though, because by doing this you’d wipe the slate clean when it comes to the established purchase price, and set up a pointless bilateral monopoly between Chrysler and H.S. Die; namely, H.S. Die really wants to be paid for the tools, and Chrysler is a willing buyer and has money. But Chrysler really needs these tools, because otherwise production grinds to a halt — and H.S. Die has the tools, and may only be willing, perhaps, to ransom them off for ten times their original sales price. It’s a high-noon stare-down with unpredictable and pointless results (i.e. someone may get shot).
On a related note, I thought that the whole reason Chrysler had claim on the tools in the first place was that they took title to them in exchange for fronting Plastech some money, or something. But if Plastech never actually paid off the toolmaker, what did they do with the money Chrysler gave them, and why didn’t Chrysler call them out on it (it’s easy enough to check a state’s lien register)?
Another domino enters the picture. Which one will fall first?
I’m guessing that Plastech used the same asset to secure two lines of credit.. one with H.S. Die and other with Chrysler. I’d bet that Chrysler accepted the dies as collateral without checking to see if they had already been pledged to another party.
I mean how you you really know? It is not like you can do a title search on tools. You have to take Plastech’s word for it. If they lie, then you get to sue them.
Sounds like Plastech has some ‘splaining to do.
The snake dies from the head down. In this case the snake is Chrysler’s entire supply chain.
I don’t see any viable scenario under which Cerberus pulls off the Chrysler turn around.
Is the Detroit Mayor’s office running Chrysler now and someone forgot to tell us?
Isn’t chrysler better off if HSD gets the tools? Methinks Chrysler doth protest too much. The legal bill for a continued fight with Plastech could likely cost them more than buying the tools from HSD again.