Herman: John L. Herman Jr., Author

How About Some Perspective...

In a period covering more than twenty years I worked on approximately 180 Chapter 11 Bankruptcy cases across the country. These companies made products we all use and would have missed had they disappeared from the landscape.

Thomaston Mills kept making sheets and pillow cases while in bankruptcy. Dorsey Trailer produced flat bed trailers, dump trucks, and large trailers for the trucking industry throughout the bankruptcy case they went through. So did Superior Toy, Chiodo Candy, Modern Faucet, and Belwood Kitchen Cabinets company. And so can GM, FORD, and CHRYSLER if the government would keep out of the auto industry and let Capitalism work.

A Chapter 11 would allow the companies to keep making products, put forth a plan to take care of creditors, handle warranty issues, and eliminate the excessive wages, health care plans and even the pension system that is choking the current companies to death.

But this isn’t politically correct. Listen folks, I made my living for those twenty years as an expert in this field. And there are remarkable Lawyers, Judges and Consultants like I was who could easily resolve even the Big Three car companies with the tools in the Bankruptcy Code. And eventually all three will in some way end up in U.S. Bankruptcy Court…because they are doomed to run out of the money we are about to waste on them. But they will take the billions now to avoid the inevitable. And this makes me very angry as Capitalism keeps getting interrupted by the greedy people who will be impacted by their own mistakes, hoping someone else will pay for their mistakes. Just like the housing crisis being caused in part by home buyers taking on a property they really couldn’t afford…so too did the workers demand contracts through their unions that were certain to cause this result.

The second the government gets out of the way…and lets these companies fail…other people will buy them for a discount price and start making cars for far less cost in labor and with far less debt, thereby allowing the entire chain of companies who supply the auto industry to survive.

Buying assets from failing companies has been accomplished successfully for many years. Many people I worked with know how to do this. And workers will be hired by the new owners to keep building cars in every plant they get their hands on…if those stalling the inevitable would just get out of the way.

• Posted: 5 December 2008
• Comments: 1
• Category: Running a business

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