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First the dodgy Op-Ed, penned by one sketchy Candidate. You really don't have to read the "fine print" to get who's side Mr. Dodgy is on ...

Let Detroit Go Bankrupt

by MITT ROMNEY, Op-Ed Contributor, -- Nov 18, 2008

    That extra burden is estimated to be more than $2,000 per car. Think what that means: Ford, for example, needs to cut $2,000 worth of features and quality out of its Taurus to compete with Toyota’s Avalon. Of course the Avalon feels like a better product -- it has $2,000 more put into it. Considering this disadvantage, Detroit has done a remarkable job of designing and engineering its cars. But if this cost penalty persists, any bailout will only delay the inevitable.

    Second, management as is must go. New faces should be recruited from unrelated industries -- from companies widely respected for excellence in marketing, innovation, creativity and labor relations.

    The new management must work with labor leaders to see that the enmity between labor and management comes to an end. This division is a holdover from the early years of the last century, when unions brought workers job security and better wages and benefits. But as Walter Reuther, the former head of the United Automobile Workers, said to my father, “Getting more and more pay for less and less work is a dead-end street.”

    You don’t have to look far for industries with unions that went down that road. Companies in the 21st century cannot perpetuate the destructive labor relations of the 20th. This will mean a new direction for the U.A.W., profit sharing or stock grants to all employees and a change in Big Three management culture.

    A managed bankruptcy may be the only path to the fundamental restructuring the industry needs. It would permit the companies to shed excess labor, pension and real estate costs. The federal government should provide guarantees for post-bankruptcy financing and assure car buyers that their warranties are not at risk.

    In a managed bankruptcy, the federal government would propel newly competitive and viable automakers, rather than seal their fate with a bailout check.

Hmmmm?  There it is the famed "federal government guarantees" to protect the vehicle warranties.  Not much else, would Romney "guarantee."

And why does Romney close his workers-be-damned screed with those references to "managed bankruptcy"?

Hmmmm?  What is a "managed bankruptcy"?  

(Will it convert "years of seniority" into 100-Lot shares of "profit-sharing stock"?   Not likely, in Mr Romney's wealth-preservation world.)

This writer noticed too, Mitt's insistence on a "managed bankruptcy" for Detroit. Mr. Lubben draws out the implications behind this private equity advocate's "fine print" ...

Was There a Bankruptcy Alternative for the Automakers?

by STEPHEN J. LUBBEN, --  Oct 23, 2012

The dispute between the Obama and Romney campaign turns on a 2008 opinion article that Mitt Romney wrote in The New York Times entitled “Let Detroit Go Bankrupt.” The Obama campaign focuses on the title, the Romney campaign on the end of the piece, where he urges that the auto companies go through a “managed bankruptcy.”

Neither campaign disputes the need for bankruptcy in the Chapter 11 sense. The crucial issue is whether Mr. Romney’s article was actually advocating something like bankruptcy in the Chapter 7 sense: appoint a trustee and liquidate.

Mr. Romney may not have actually advocated Chapter 7 for G.M. or Chrysler, but his ideas about a “managed bankruptcy” might have lead to the same place.

Chapter 7 ... Chapter 11 ... Aren't all bankruptcies the same?

Well, not really. One puts a focus on restoring the Business back to a viable operation. The other puts the focus restoring the Investors and creditors -- by selling the Business off for parts:

Chapter 7, Title 11, United States Code

Chapter 7 of the Title 11 of the United States Code (Bankruptcy Code) governs the process of liquidation under the bankruptcy laws of the United States. (In contrast, Chapters 11 and 13 govern the process of reorganization of a debtor in bankruptcy.) Chapter 7 is the most common form of bankruptcy in the United States.[1]

[...] A Chapter 7 Trustee is appointed almost immediately, with broad powers to examine the business's financial affairs. The Trustee generally sells all the assets and distributes the proceeds to the creditors. This may or may not mean that all employees will lose their jobs. When a very large company enters Chapter 7 bankruptcy, entire divisions of the company may be sold intact to other companies during the liquidation.[citation needed]

Fully secured creditors, such as collateralized bondholders or mortgage lenders, have a legally enforceable right to the collateral securing their loans or to the equivalent value, a right which cannot be defeated by bankruptcy.

In a Chapter 7 case, a corporation or partnership does not receive a bankruptcy discharge -- instead, the entity is dissolved. Only an individual can receive a Chapter 7 discharge (see 11 U.S.C. § 727(a)(1)). Once all assets of the corporate or partnership debtor have been fully administered, the case is closed.

Chapter 11, Title 11, United States Code
Chapter 11 retains many of the features present in all, or most, bankruptcy proceedings in the U.S. It provides additional tools for debtors as well. Most importantly, 11 U.S.C. § 1108 empowers the trustee to operate the debtor's business.

Chapter 11 affords the debtor in possession a number of mechanisms to restructure its business. A debtor in possession can acquire financing and loans on favorable terms by giving new lenders first priority on the business' earnings. The court may also permit the debtor in possession to reject and cancel contracts. [...]

All creditors are entitled to be heard by the court. 11 U.S.C. Sec. 1109 (b). The court is ultimately responsible for determining whether the proposed plan of reorganization complies with the bankruptcy law.

Which method of bankruptcy do you think a billionaire Corporate Raider would prefer?

One that protects Jobs and their Workplace... or one that protects Wall Street Investors?

Jonathan Turley gives us a few "concrete reasons" why Mitt Romney might have wrote off the Electoral-pivotal states so Michigan and Ohio, when he opined so callously on the the merits of a "managed bankruptcy" ...

Did Romney Profit from the Auto Bailout?

by JONATHAN TURLEY -- October 21, 2012   

The most prominent venture capitalist who was involved in the bailout bonanza was Elliott Management and its leader, Paul Singer.  Mr. Singer and Elliott Management had many prominent investors, including Ann and Mitt Romney.  “But Romney has done a good job of concealing, until now, the fact that he and his wife, Ann, personally gained at least $15.3 million from the bailout -- and a few of Romney’s most important Wall Street donors made more than $4 billion. Their gains, and the Romneys’, were astronomical -- more than 3,000 percent on their investment.”

You read that correctly.  Mr. Romney and his wife “earned” at least $15.3 million from the bailout because of Singer and Elliott Management’s involvement and ownership of a key supplier to GM and Chrysler.  That key supplier was Delphi Automotive.  Delphi was originally a subsidiary of GM, but it became a separate company in the late 90′s before filing bankruptcy in 2005.  When the government task force began working on the bailout of GM and Chrysler they came face to face with the hungry venture capitalists that now controlled Delphi.

Romney has slammed the bailout as a payoff to the auto workers union. But that certainly wasn’t true for the bailout of Delphi. Once the hedge funders, including Singer -- a deep-pocketed right-wing donor and activist who serves as chair of the conservative, anti-union Manhattan Institute -- took control of the firm, they rid Delphi of every single one of its 25,200 unionized workers.”

According to Mitt Romney and his associates, it was those greedy Union Workers that were the source of all GM competitive ills.

Not the Outsourcing of all those "supply chain" jobs to the foreign lands of cheap labor.

Not the CEO salaries and their outrageous "golden parachutes" -- un-tied to actual results.

Not the Hedge Fund investor class who has turned our basic value-added commodities (like Auto-Parts), into their own private casinos.

NO, it's those workers expecting "job security and better wages and benefits" -- you know, that "holdover from the early years of the last century" --

THEY are the problem in Mitt Romney's world. Workers are the threat to Wall Street's million dollar short-term wagers.

That was why in Romney's world, the only wealth-preserving solution was to "Let Detroit go Bankrupt."

In a "managed proceeding" of course -- Chapter 7 style.  

Where the Vultures are at the head of the asset-redistribution line ... And the workers are left out in the street.  Without Job. Without a Pension. Without a benefit, earned from all their hard years of sweat-equity labors.

Without a profit-sharing "share" in sight.   Kind makes you wonder, who really did build that in Romney's high-roller economy, eh? ... After all is said and parceled ... And ultimately cashed out.

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Comment Preferences

  •  Tip Jar (11+ / 0-)

    Are you ready to Vote? Are you still 'allowed' to Vote?
    -- Are you sure?

    by jamess on Sun Oct 28, 2012 at 11:17:35 AM PDT

  •  OK. (1+ / 0-)
    Recommended by:

    I'm still trying to figure out why Honda assembly line workers in Ohio and Nissan designers in California are paying to subsidize their competition.

    Where's the Corporate Welfare for laid-off Cannondale, Specialized and GT/Schwinn employees?  Our vehicles were Zero Emissions.

    •  we need (3+ / 0-)
      Recommended by:
      annieli, Eric Nelson, Lily O Lady

      a long-term national energy policy.

      and some long-term incentives,
      to ensure that we can get there,

      with American workers, and American ingenuity.

      Wall Street investors, are the very antithesis of this.

      Wall Street investors, Corporate Raiders, are all about the short-term

      -- even if they leave local communities in shambles.

      THAT is not their problem.

      Are you ready to Vote? Are you still 'allowed' to Vote?
      -- Are you sure?

      by jamess on Sun Oct 28, 2012 at 11:34:43 AM PDT

      [ Parent ]

    •  Asian governments subsidize their companies (4+ / 0-)
      Recommended by:
      jamess, annieli, IreGyre, Eric Nelson

      routinely.   Look at solar in China and chips in Japan (MITI) for just two examples.

      EADS is subsidized by the Europeans and is our Boeing's only serious competitor in large aircraft.

      We did it because it was in our best interest is why.

      "The way to see by faith is to shut the eye of reason." - Thomas Paine

      by shrike on Sun Oct 28, 2012 at 11:49:22 AM PDT

      [ Parent ]

  •  Delphi automotive holdings had bankruptcy... (7+ / 0-)

    (Chapt. 11).  Delphi was spun off from GM and after that struggled financially.  In 2009  Delphi...completed a messy, four-year stay in bankruptcy protection on Tuesday... (Oct. 6, 2009:)

    ....with a sale of its assets to lenders and its former parent...

    Delphi will now own four plants in the United States, which is all that remains of the 44 that it operated in this country when it filed for Chapter 11 protection in October 2005. Delphi, which was spun off by G.M. in 1999, was the nation’s largest automotive supplier at the time with more than 50,000 employees. Its domestic work force now numbers 14,000...

    Delphi, which has followed vulture capitalist Romney's business plan, and after cutting over 36,000 American jobs, has completed its acquisition of FCI Group's motorized vehicles unit for 765 million euros ($987.5 million) (Posted on October 26, 2012)
    The motorized vehicle business of FCI, which is based in the U.K., makes auto connection systems. It is owned by affiliates of Bain Capital.

    BTW, during that Delphi bankruptcy, workers lost 30-70% of our pensions we lost all of our health care, all of our life insurance,” added Gerwin.

    But, in Romneyland, it's all good, because:  

    "...The company said Friday that it still expects the transaction to add 24 cents per share to its 2013 earnings..."
    Ah, life is good for Delphi CEO's, shareholders, and their Bain Capital affiliates.
  •  Another mitt lie? (2+ / 0-)
    Recommended by:
    jamess, Eric Nelson

    Kinda off the subject but..

    But as Walter Reuther, the former head of the United Automobile Workers, said to my father, “Getting more and more pay for less and less work is a dead-end street.”
    As a UAW member and an unofficial historian on my hero, Walter Reuther, I've never read or seen this quote in any of his or his brothers writings. Walter was a firm believer in "a fair days work for a fair days pay" but I couldn't imagine him saying anything like this. Unless it was directed at management. But I still doubt it. More than likely, if this statement was actually spoken, it came from George Romney, not Walter Reuther.

    "If fighting for a more equal and equitable distribution of the wealth of this country is socialistic, I stand guilty of being a socialist." Walter Reuther

    by fugwb on Sun Oct 28, 2012 at 12:54:47 PM PDT

  •  Very true... Proof: SAAB (5+ / 0-)

    SAAB was purchased from GM by a private investor.  That investor immediately needed to shop around for cash and was unable to find any. For a couple years it sat in Chapter 11 looking for suitors to buy some or all of the company.  Inevitably after many months of starting and stopping production, SAAB went belly up.

    The same thing would have happened to GM and Chrysler.  There are global implications too because their international business would disappear as well.  Ford might have survived but their supply chains would have been decimated.  

    There would probably be no US made cars in the 2008 model year had we not stepped in.

  •  Love how Mitt is going full on reverse lie now (3+ / 0-)
    Recommended by:
    jamess, mindara, Eric Nelson

    The Delphi story shows exactly what he would like to have done with GM and Chrysler... and after they went dragging down many more in the supply chain... tottering Ford would have been next on the list vulture dismemberment list...

    And he now says Obama bankrupted Detroit after previously saying it was He, Mitt's idea... Obama only copying the sage Mitt advice... then it was good now it is bad... except that the Obama way used to be bad before that since poor Mitt was not able to suck money out of a Chapter 7...

    yes and now he says because of Obama Jeep is going to China... this close to election day it seems Mitt can now just lie wildly now about anything and with complete impunity...

    Pogo & Murphy's Law, every time. Also "Trust but verify" - St. Ronnie (hah...)

    by IreGyre on Sun Oct 28, 2012 at 01:21:57 PM PDT

  •  "You can Kiss the American auto industry goodbye" (3+ / 0-)
    Recommended by:
    jamess, Egalitare, Lily O Lady

    Romney -

    Published: November 18, 2008  

    A managed bankruptcy may be the only path to the fundamental restructuring the industry needs. It would permit the companies to shed excess labor, pension and real estate costs.

     Chapter 7 = liquidation - the entity is dissolved
    That's what Romney will never come clean in his campaigning speeches: shedding "excess" labor and the workers earned pensions. - and Romney made $$$$$ while workers lost everything and Romney calls them, their livelihoods and their retirement - excess.

    - liquidation is what the President said during the last debate, but was cut off by Romney's interruption denying that liquidation was what he intended. It was a lie then and is still a lie

    So glad you did this work jamess

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