Bankruptcylitigationblog.com provides its readers—and there’s bound to be a whole new audience these days—with a ChryCo C11 crib sheet. The facts are predictably startling (if that makes any sense). The top 50 unsecured creditors’ claims total $730 million, with total trade at about $1.5 billion. The senior lenders’ claims total $6.9 billion. As you know, Chrysler owes the you, the people, $4 billion for your extremely generous bridge loans to nowhere (secured by a third priority lien). Chrysler owes Cerberus and Damiler AG $2 billion (secured by a second priority lien). Chrysler owes the United Auto Workers VEBA health care fund approximately $8.5 billion. Also highlighted: German automaker Daimler paid $37 billion for Chrysler when it purchased it in 1998. And lost it all. The “smartest guys in the room” (a.k.a. Cerberus) paid $7.4 billion for an 80 percent stake in Chrysler in May 2007. And lost it all. Checking the balance sheet, Chrysler has $52.6 billion in real liabilities, broken into the following categories: Trade and Related Payables ($5.7B), Accrued Expenses and Other Liabilities ($33B) and Financial Liabilities ($13.9B). The bloggers’ summary of the new plan after the jump.
With the plan presently on the table proposing basically an all equity plan, except for $2 billion to the senior lenders, a $4.6 billion note to the VEBA trust, and about $1.5 billion in trade payables and $4 billion in pension obligations assumed in the sale, we’re talking about losses of about $40 billion in claim value and an additional $43.4 billion in equity value!
This from part II of the Coleman Law blog on the topic: “But with all Chrysler plants and operations now idled pending a final sale, the pressure to get the deal consummated and return people to work will be so overwhelming that it’s hard to imagine Judge Gonzalez not approving the transaction in some form that’s acceptable to everyone (except perhaps the dissenting lenders).”
http://www.bankruptcylitigationblog.com/archives/bankruptcy-in-the-news-chrysler-files-bankruptcy-part-ii-testing-the-limits-of-section-363-sales.html
Lasorda has announced he is retiring.
His union Dad is today the happiest man in Windsor.
“The “smartest guys in the room” (a.k.a. Cerberus) paid $7.4b for an 80 percent stake in Chrysler in May 2007. And lost it all.”
No they didn’t. First, that was OPM. Second, how much of that was secured debt to possibly be partially repaid through the CH11 proceedings? Third, CDS’. Fourth, how much of a stake will Cerberus take in the married GMAC and Chrysler financial cleaned of all debt and set up with their own money printer? And fifth, I’m sure Cerberus raked in management fees for helping to negotaite the sale of Chrysler to their investors and managing that investment.
I still think Cerberus will make out very well from their investment in Chrysler.
I still think Cerberus will make out very well from their investment in Chrysler.
I don’t see how they could. But yes, most of the money they’ve lost is almost surely other people’s money, not their own personal stakes.
The main hit is to their reputation. I can’t imagine that they look so good as a result of this. This goes beyond bad timing; Cerberus blew the analysis, and lost billions for their investors because of it. Even though they are not legally obligated, it wouldn’t surprise me if they feel bound to cut some checks just to show some good faith. If I was a Cerberus investor, I’d have some rather unpleasant attorneys rumbling about all of the claims that I might have…
I still think Cerberus will make out very well from their investment in Chrysler.
I don’t buy that for one minute. Daimler Benz stripped Chrysler of anything of any value. In fact, I’d question if the DCX ‘merger’ even netted DB anything at the end. I find the numbers in this posting completely believable.
The only people who made out for certain are the people like Eaton, Schremp and Kerkorian who cashed out in the pre-2003 timeframe.
A question to the bankrupcy lawyer: What happens to collateralized creditors?
@Bluecon Tommy Lasorda is a pretty smart guy,we havn’t heard the last of him.His blue collar roots didn’t sit well with the ruling elite at GM
It wouldn’t shock me to see him return to GM,or whats left of it.
I could count on one hand the senior management that earned the respect of the hourly ranks.Tommy Lasorda would be one of them.
@ PCH,
“The main hit is to their reputation. I can’t imagine that they look so good as a result of this.”
I completely agree with you there, although, call me cynical but, I seriously doubt Cerberus is getting ready to break out the checkbook. If they cared that much about their rep, they would have put a little more money and effort into preventing this mess in the first place.
Cerberus doesn’t assume they will win on every bet. They structure deals to maximize the upside if all goes well, and minimize the downside if it doesn’t.
They aren’t dumb.
I wonder who owns the Chrysler HQ… Probably not Chrysler. Plus remember that Daimler paid to get rid of Chrysler.. TWICE!
Cereberus owns the Auburn Hills “Chrysler” HQ and engineering facilities, and leases it to Chrysler.
The “other” engineering facilities (ex-Kelvinator factory and HQ, ex-Nash-Kelvinator HQ, ex-AMC engineering facility, ex-Jeep Dodge Truck engineering facility) on Plymouth Road in Detroit, Chrysler closed down about a year or two ago, I heard.
Otherwise there would be somewhere else for the New New Chrysler Corporation to go to engineer their vehicles without paying rent to an ex-owner.
Well, duh! Silly me. The engineering work will be done in Turin, Italy, anyhow….
“…Daimler paid $37B for Chrysler…”
Does the $37B reflect the approximately $10B piggy-bank that Chrysler had at the time? The piggy bank disappeared. Might be that Diamler only net paid $27B for Chrysler. Either number makes the wizards of Stuttgart not look good.
Thanks for the link to the Bankruptcy Litigation Blog! You’re right, there are readers never seen before, and thanks to all for taking the time to visit and read!
On the question of what happens to collateralized creditors, basically, under the deal offered, the Senior Lenders (JPM and dissidents) are slated to get $2 billion and the rest of the secured debt gets wiped out (except that the USA and Canada get 8% and 2% of New Chrysler equity, respectively). Also, appreciate hearing good things about Tom LaSorda. His credibility will be critical at trial.
@ mikey
Lasorda is despised by the hourly ranks at the Windsor minivan plant. His sister is a union steward in the plant and even she stood up at a union meeting and cut him off at the knees.
Daimler and Cerberus remind me of that story about the guy whose two happiest days were the day he bought the boat and the day he sold the boat.
Well, at least Cerberus winds up with the fancy HQ building and other (now-closed) facilities. They should be able to make a killing selling those properties. I hear the real estate demand and supply ratio in Detroit nowadays is unprecedented.
The ship is about to take on a bit more water.
Leading floorplan banks are sending out termination letters to Chrysler dealers today. Chase is one of them.
@Bluecon Huh…. Really I guess it was 1981–maybe 83 that Tommy was with us.He was such a nice guy.Time has a way of changing people.Go figure eh?
It’s not his fault.
Everytime there is a bad news announcement particularly for Windsor he gets to do the dirty work, so the people blame him. And then the $19 million bonus didn’t help.
I know he is very glad to get the opportunity to get out of that mess.
Well, at least Cerberus winds up with the fancy HQ building and other (now-closed) facilities. They should be able to make a killing selling those properties. I hear the real estate demand and supply ratio in Detroit nowadays is unprecedented.
Right, they can convert CTC to a Giant Shopping Mall for the people who don’t want to go to the Giant Shopping Mall 10 minutes north on I75 or the one 10 minutes south on I75. It’s perfect!
“A question to the bankrupcy lawyer: What happens to collateralized creditors?”
The President of the United States berates them for no giving it up to the unions.
I thought Cerberus-controlled GMAC was sending out termination letters to Chrysler dealers, also. They are the new floorplan lender for Chrysler now as Chrysler Financial is all but kaput. GMAC specializes in killing dealers for GM so I am sure they will have no trouble doing that for Chrysler.