Autoblog http://www.autoblog.com Autoblog http://www.blogsmithmedia.com/www.autoblog.com/media/feedlogo.gif Autoblog http://www.autoblog.com en-us Copyright 2009 Weblogs, Inc. The contents of this feed are available for non-commercial use only. Blogsmith http://www.blogsmith.com/<![CDATA[Fed may reconsider $500k salary cap for new GM CEO, limit pay for 2nd tier execs]]>http://www.autoblog.com/2009/12/14/fed-may-reconsider-500k-salary-cap-for-new-gm-ceo-limit-pay-fo/http://www.autoblog.com/2009/12/14/fed-may-reconsider-500k-salary-cap-for-new-gm-ceo-limit-pay-fo/http://www.autoblog.com/2009/12/14/fed-may-reconsider-500k-salary-cap-for-new-gm-ceo-limit-pay-fo/#commentsFiled under: ,



It's official: pay czar Kenneth Feinberg's executive compensation rules for companies yet to return their bailout funds means a cap of $500K for second-tier executives. Importantly, that number represents the total compensation allowed, but only 45 percent of it -- $225,000, can be in cold, hard ducats. Stock remuneration must be held or paid out over at least two years, and extracurricular perks like country club memberships and private jet escapades can be valued at no more than $25,000.

Regarding General Motors, to lure the kind of executive the company seeks it will probably need a bit more flexibility with pay than the rules previously enforced on it by the pay committee. Feinberg said he will look at GM's compensation proposal when a suitor is located. It would be nigh on impossible to lure that candidate with the come-on, "Fix everything, here's a million bucks now, you'll get some Scooby Snacks in 2013, let us know when you're done, kthxbai."

Feinberg appeared to refine his pay re-examination statement, though, citing a case where GM brings someone in "laterally," not simply chooses from among the ranks. Like him, we all know that "It is vitally important that GM, under the law, be competitive and be able to compete in the automobile marketplace," especially if we want to get any more of that $30 billion back.

[Source: Automotive News - sub. req. | Image: Win McNamee/Getty]

Fed may reconsider $500k salary cap for new GM CEO, limit pay for 2nd tier execs originally appeared on Autoblog on Mon, 14 Dec 2009 08:27:00 EST. Please see our terms for use of feeds.

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Beijing Automotive Industry Corporation (BAIC) could still be in the game for Saab, having secured a $2.93 billion line of credit from the Bank of China. On the other hand, BAIC could just be gearing up for its own home-grown expansion plans, with an eye on ramping up production and putting financial and technological legs underneath its partnerships with Mercedes and Hyundai.

Or... it could be doing both: trying to buy Saab and as well as remodel its business. The deal for Saab between GM and Koenigsegg was for about $1 billion: the European Investment Bank approved a loan for $615 million, and BAIC provided about $400 million by buying a minority stake in the Koenigsegg Group. If BAIC did its own deal with GM for that same amount -- although we have a feeling they could get a Christmas discount -- that would leave nearly $2 billion for BAIC to take care of Saab and invest in its own operations.

This is, of course, pure speculation -- BAIC could have something else in mind entirely. All we know right now is that they've got a lotta yuan just sitting around waiting to be spent, and aborted plans to build the new 9-5 in China. This Saab story isn't finished yet...

[Source: Reuters]

REUTERS: China's BAIC secures $2.1B line of credit... is it for Saab? originally appeared on Autoblog on Sun, 06 Dec 2009 12:37:00 EST. Please see our terms for use of feeds.

Read | Permalink | Email this | Comments]]>baicBeijing Automotive Industry CorpBeijingAutomotiveIndustryCorpchinafinancialsgeneral motorsGeneralMotorsgmkoenigseggsaabSun, 06 Dec 2009 12:37:00 EST<![CDATA[REPORT: Chrysler could lose up to 145 more dealers because they can't get financed]]>http://www.autoblog.com/2009/11/23/report-chrysler-could-lose-up-to-145-more-dealers-because-they/http://www.autoblog.com/2009/11/23/report-chrysler-could-lose-up-to-145-more-dealers-because-they/http://www.autoblog.com/2009/11/23/report-chrysler-could-lose-up-to-145-more-dealers-because-they/#commentsFiled under: ,



Chrysler's dealers haven't yet entered the portion of the game wherein they can catch a break. As if the dearth of inventory and lack of new vehicles weren't enough, nearly 150 dealers haven't been able to finalize floorplan financing. Since Chrysler Financial has exited that business, GMAC stepped in, but dealers are having a hard time meeting its terms: 85 have been turned down flat, another 60 or so are still working on it.

In some cases GMAC has asked for more collateral; in at least one other case, GMAC is looking for the dealer to alter the lending structure of his mortgages (not floorplan), held by Chrysler Financial. The former Pentastar piggy bank, again accused of trying to wind down its operations, said it "continues to cooperate" with all involved. If the rumored number of dealers does fall, it would take Chrysler's planned closures up to nearly 1,000, after the 789 announced earlier this year.

[Source: Bloomberg | Image: Mark Ralston/Getty]

REPORT: Chrysler could lose up to 145 more dealers because they can't get financed originally appeared on Autoblog on Mon, 23 Nov 2009 10:30:00 EST. Please see our terms for use of feeds.

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When General Motors entered into Chapter 11 bankruptcy over the summer, its bad assets were moved into a firm called Motors Liquidation Company (MLC). That company was capitalized with more than 600 million shares that were meant to be worthless; however, quite the opposite has happened: with its shares priced at $0.60 per, MLC now has a market cap of $370 million. How did that happen?

Investors engaged in "naked short-selling" is how it happened. Short sellers usually procure an actual 'tangible' stock from a broker or investment house - 'tangible' meaning a share unit comprising the finite number of a company's total shares - as collateral when they take a short position. The naked short seller doesn't borrow any shares, taking a position before it can be determined if there are any shares available. This allows them to essentially create a position that isn't beholden to the ideal of a "structured" market.

Earlier this year the SEC put the kibosh on naked short selling, and required investors who had done it to get the tangible shares they need to hold their position. Since there are fewer shares to be had, and those naked traders are trying to absorb anything available to cover their positions, the price has yet to decline. Quite simply, no one can make money off of it.

Well, except for the holders of new GM shares. The SEC regulations also called on naked short sellers to close out their positions if they couldn't get the tangible stocks to cover. The investors who can't get actual shares to borrow are having to buy stock from "new" GM shareholders - at much higher prices. Eventually MLC shares will be worth zilch. Until then, the wacky world of finance reigns...

[Source: New York Times]

GM's Liquidation Motors stock reportedly still worth $370M, can't be sold short originally appeared on Autoblog on Wed, 04 Nov 2009 08:40:00 EST. Please see our terms for use of feeds.

Read | Permalink | Email this | Comments]]>earningsfinancefinancialsgeneral motorsGeneralMotorsgovernmentWed, 04 Nov 2009 08:40:00 EST<![CDATA[Former President Bush asks Obama to exit the car business]]>http://www.autoblog.com/2009/10/26/former-president-bush-asks-obama-to-exit-the-car-business/http://www.autoblog.com/2009/10/26/former-president-bush-asks-obama-to-exit-the-car-business/http://www.autoblog.com/2009/10/26/former-president-bush-asks-obama-to-exit-the-car-business/#commentsFiled under:



When Former President George W. Bush spoke to the Montreal Board of Trade recently, he made a public appeal to the Obama administration to "get out of the private sector," adding "I hope our government gets out of the autos and the financials in which they have a stake." His premise is that it takes private companies to turn an economy around, not government-run ones.

As we have found out during America's recent economic troubles, a lot of people find it easy to say a lot of things when they're not on the hook. And the former Commander-in-Chief isn't the first (nor the only) ex-President to offer such advice; they've all done it - he's only the most recent. But this is coming from the man whose VP sold him out as giving TARP money to prevent General Motors and Chrysler bankruptcies on his watch. Lest we forget, Bush is also the man who said:
"Well, I have obviously made a decision to make sure the economy doesn't collapse. I've abandoned free market principles to save the free market system. I think when people review what's taken place in the last six months, uh, and put it all in one, in one, (sigh), you know, in one package, they're realize how significantly we have moved."
Forget about politics, it isn't even that what Bush has said is wrong, per se - by most accounts, the American government shouldn't be in the car business nor the retail banking business, and the current administration agrees with that, having said repeatedly it wants to get out of both. But they inherited the issue, and now it's up to them to figure out the best way out of it. Hat tip to Avinash!

[Source: Bloomberg | Image: Getty]

Former President Bush asks Obama to exit the car business originally appeared on Autoblog on Mon, 26 Oct 2009 12:58:00 EST. Please see our terms for use of feeds.

Read | Permalink | Email this | Comments]]>Bushchrysler bankruptcyChryslerBankruptcyfinancialsgeneral motors bankruptcyGeneralMotorsBankruptcyGeorge Bushgeorge w bushGeorgeBushGeorgeWBushgovernmentObama administrationObamaAdministrationTARPTARP moneyTarpMoneyMon, 26 Oct 2009 12:58:00 EST<![CDATA[REPORT: Chrysler Financial to wind down by 2011, executive pay, well, not so much]]>http://www.autoblog.com/2009/10/25/report-chrysler-financial-to-wind-down-by-2011-executive-pay/http://www.autoblog.com/2009/10/25/report-chrysler-financial-to-wind-down-by-2011-executive-pay/http://www.autoblog.com/2009/10/25/report-chrysler-financial-to-wind-down-by-2011-executive-pay/#commentsFiled under: ,



Cerberus submitted its plans for Chrysler Financial to the U.S. Treasury, and then in an announcement that came as a surprise to Cerberus itself, the Treasury said that Chrysler Financial would be shutting down by December 31, 2011. The lending arm paid back its $1.5 billion loan from the government's TARP program, but much of its dealer financing and loan operations were replaced by GMAC.

Even though Chrysler Financial is a far weaker business than it once was -- its loan portfolio has been more than halved -- Cerberus said that shutting it down wasn't in the long-term plan. The Treasury replied that it got the idea of closure from its talks with Cerberus and the paperwork submitted by the capital management firm. There will most likely be a lot more "They said/We said" before this is through.

What isn't in question is the fact that if you want big money in the banking biz, you should get a job or keep your job with Chrysler Financial. Severe pay reductions were announced for financial firms that hadn't paid back their loans, which means that ChrysFin is excused from those measures. As well, according to pay czar Kenneth Feinberg -- and which would appear to bolster Treasury's take on the company's future -- "the risk of employee departures must be minimized because Chrysler Financial has stated it intends to wind down its operations and will have difficulty attracting new employees."

That means that, according to government's take on Cerberus' take, the company needs to keep pay high so it can keep good people so it can close in two years. To paraphrase Captain Willard in Apocalypse Now, the BS is piling up so fast we'll need wings to stay above it. Stay tuned...

[Source: Detroit News]

REPORT: Chrysler Financial to wind down by 2011, executive pay, well, not so much originally appeared on Autoblog on Sun, 25 Oct 2009 09:27:00 EST. Please see our terms for use of feeds.

Read | Permalink | Email this | Comments]]>cerberuschryslerChrysler FinancialChryslerFinancialearningsfinancialsKenneth FeinbergKennethFeinbergpay czarPayCzarSun, 25 Oct 2009 09:27:00 EST<![CDATA[REPORT: Nissan ready to say "Mission Accomplished" on recovery work]]>http://www.autoblog.com/2009/10/24/report-nissan-ready-to-say-mission-accomplished-on-recovery-w/http://www.autoblog.com/2009/10/24/report-nissan-ready-to-say-mission-accomplished-on-recovery-w/http://www.autoblog.com/2009/10/24/report-nissan-ready-to-say-mission-accomplished-on-recovery-w/#commentsFiled under: ,



Some companies respond to "losing money at a frightening pace" by studying the problem at length as they continue to lose more money, by asking for more money or, in the worst cases, not doing anything at all. Nissan didn't do any of those things: after posting a loss of $2.4 billion in the fiscal year that ended in March of 2009, Carlos Ghosn put Nissan EVP Colin Dodge in charge of a financial recovery task force. Just months later, the task force is about to disband itself. Said Dodge, "We're not losing money anymore."

How did they do it? The usual tactics: new car programs shelved, production moved to China and Thailand, suppliers dropped -- you know the drill. The noteworthy thing is how quickly Nissan did it: just about half a year. Said Dodge, "The industry has made hard work out of decisions like this. It doesn't have to be so studied."

Nevertheless, while Nissan has stopped losing money -- and that's a great thing -- how will those shelved programs affect Nissan's future lineup and how thoroughly do you vet a new supplier that you turn to in a panic? It isn't the first time that Nissan has been in dire trouble, and they've made it out all right before, so we figure they know what they're doing. But the real proof of Dodge's work, and apparent success, won't be seen for a while.

[Source: Auto News, sub req'd]

REPORT: Nissan ready to say "Mission Accomplished" on recovery work originally appeared on Autoblog on Sat, 24 Oct 2009 19:03:00 EST. Please see our terms for use of feeds.

Read | Permalink | Email this | Comments]]>earningsfinancialsnissanSat, 24 Oct 2009 19:03:00 EST<![CDATA[REPORT: 'Old' Chrysler defaulting on loan obligations]]>http://www.autoblog.com/2009/09/08/report-old-chrysler-defaulting-on-loan-obligations/http://www.autoblog.com/2009/09/08/report-old-chrysler-defaulting-on-loan-obligations/http://www.autoblog.com/2009/09/08/report-old-chrysler-defaulting-on-loan-obligations/#commentsFiled under: , , ,



Before there was a Motors Liquidation Co, post-bankruptcy GM's hived-off shelter for useless assets, there was Old Carco LLC. That's the company Chrysler built to house its useless assets, and unsurprisingly, it doesn't have good news for unsecured creditors. Old Carco was left with liabilities of $20.5 billion, but has less than half of that to pay off everyone it owes.

The latest accounting says there is $2.345 billion to pay things off. With a shortfall that drastic, even the U.S. Treasury and the Canadian governments are waiting for their money, with a $3.34 billion loan and $29 million in interest going not being repaid. The Treasury sent Old Carco a notice of default last month, which strikes us as a waste of a stamp and paper.

And since Old Carco isn't allowed to borrow any more money, there is almost no chance that creditors will be made whole. At this point, as the company tries to unload leftover factories and property, it looks like the best anyone's going to get is pennies on the dollar -- or just fractions of that -- and that could be for the folks first in line. Old Carco is dead, long live Chrysler...

[Source: Detroit News | Image Source: Bill Pugliano/Getty]

REPORT: 'Old' Chrysler defaulting on loan obligations originally appeared on Autoblog on Tue, 08 Sep 2009 17:20:00 EST. Please see our terms for use of feeds.

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Tata's target was £1 billion ($1.65B U.S.) in loans to keep the JLR group going. And while Tata is in talks with the U.K government about providing a large chunk of that, some of the government's terms -- like veto power over management decisions-- prevented Tata from pulling the trigger.

A measure of success has been achieved with the announcement that Tata has secured a £175 million ($289M U.S.) loan from private sources. Those funds mean that Tata doesn't need the government's money. It also means short cuts won't need to be taken during the current launch of the new XJ and launch of the facelifted Rovers later this year.

[Source: Automotive News - Sub. Req.]

Tata gets private-sector loan, doesn't need UK government money originally appeared on Autoblog on Thu, 13 Aug 2009 08:59:00 EST. Please see our terms for use of feeds.

Read | Permalink | Email this | Comments]]>europefinancialsgovernmentjaguarjlrloansrange roverRangeRovertataukThu, 13 Aug 2009 08:59:00 EST<![CDATA[REPORT: New GM entitled to $16 billion in federal tax breaks courtesy of Old GM]]>http://www.autoblog.com/2009/08/04/report-new-gm-entitled-to-16-billion-in-federal-tax-breaks-cou/http://www.autoblog.com/2009/08/04/report-new-gm-entitled-to-16-billion-in-federal-tax-breaks-cou/http://www.autoblog.com/2009/08/04/report-new-gm-entitled-to-16-billion-in-federal-tax-breaks-cou/#commentsFiled under: , ,



Due to what appears to be a slight (additional) bending of the rules, the "new," post-bankruptcy General Motors has been allowed to carry the $16 billion net operating loss that was created by the "old" GM. That means that New GM will not have to pay taxes on its profits for a while, because the profits can be written off by the losses.

The issue is that the move, called a "tax-loss carry forward," isn't supposed to be available to the automaker. The tax code contains provisions that prohibit a profitable company from buying an unprofitable company for the sole purpose of claiming the unprofitable company's tax losses - and the type of bankruptcy GM went through should have precluded The General's ability to use the tax loss practice.

Except for the fact that GM was bought by the government, and since the government writes the tax code and collects said taxes, it can decide how it wants to handle the companies it owns. General Motors says the move will bolster its "cash position to the benefit of all parties." Critics, on the other hand, say that GM got a $16 billion unfair head start on Ford. Hat tip to Adrian.

[Source: The Wall Street Journal | Image: Jim Watson/AFP/Getty]

REPORT: New GM entitled to $16 billion in federal tax breaks courtesy of Old GM originally appeared on Autoblog on Tue, 04 Aug 2009 08:27:00 EST. Please see our terms for use of feeds.

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Porsche maintains it still has its mojo, but Volkswagen is treating the company like Porsche's got lunch money and VW is hungry. VW -- which Porsche effectively owns -- loaned Porsche €700 million ($983.8 million) earlier this year, with Porsche due to pay it back in September. As collateral for the loan Porsche used its wholesale distribution arm Porsche Holding GmbH.

The way things are going for Porsche, it might not be able to make that September repayment. So VW and the state of Lower Saxony made an offer: Porsche has until the end of June to accept an offer by VW to pay €3 to €4 billion ($4.2 billion to $5.6 billion) for a 49% Porsche's car business. If Porsche doesn't accept, then VW will "insist" Porsche repay the full amount of the loan in September. If Porsche can't come up with the coin VW could walk away with Porsche Holding GmbH.

Porsche, plucky as ever, didn't want to hear about any of that, saying "Ultimatums do not belong in the 21st century.... We hope very much in the interest of the common goals that the authors of the ultimatum regain their calm..." The crew at VW quickly issued a response, with one spokesperson simply saying, "There is no ultimatum."

Porsche has plenty of time to sort things out, and its investment talks with Qatar, which would greatly help its debt situation, are said to "have entered the final stretch." Thanks for the tip, C. Halen

[Source: Reuters, Automotive News - Sub. Req.]

REPORT: VW leans on Porsche, Porsche responds, "We will not accept extortion." originally appeared on Autoblog on Mon, 29 Jun 2009 09:27:00 EST. Please see our terms for use of feeds.

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Daimler's Dieter Zetsche has called 2009 a "Darwin year" for the car business, with the weak and the lame being pulled down by larger forces. Surprisingly, Porsche was one of those businesses that nearly went under, and it has been looking for help almost anywhere it could get it. Reuters says that Germany's Manager Magazin recently reported that Porsche and Daimler held talks in May regarding Daimler taking a stake in either Porsche or VW in order to help Porsche balance its books.

The article asserted that Zetsche and Porsche's Wendelin Wiedeking were looking at options including a cash exchange for a piece of Porsche, or a derivatives purchase from Porsche that would then be converted in VW shares. Spokesmen for both carmakers has since called the report "pure speculation" and are refusing to comment further. If such a scenario were explored, we know how it would help Porsche -- but what would it do for Daimler?

[Source: Reuters]

REPORT: Daimler, Porsche dismiss talks of stake as "speculation" originally appeared on Autoblog on Mon, 22 Jun 2009 10:28:00 EST. Please see our terms for use of feeds.

Read | Permalink | Email this | Comments]]>daimlerdieter zetscheDieterZetscheearningsfinancialsmercedesmercedes benzmercedes-benzMercedesBenzporschewendelin wiedekingWendelinWiedekingMon, 22 Jun 2009 10:28:00 EST<![CDATA[GM grants reprieve to 30 dealers, reviewing more]]>http://www.autoblog.com/2009/06/11/gm-grants-reprieve-to-30-dealers-reviewing-more/http://www.autoblog.com/2009/06/11/gm-grants-reprieve-to-30-dealers-reviewing-more/http://www.autoblog.com/2009/06/11/gm-grants-reprieve-to-30-dealers-reviewing-more/#commentsFiled under: ,



General Motors wants to shrink its dealer network by around 2,500 outlets and has sent closure notices to more than a thousand already. Still, the General has left a door open that allows affected dealers to appeal the decision and show proof of why they should not be cut from the herd.

According to reports, almost the entire affected body of dealers appealed, and 500 of those appeals are still pending. Thirty dealers have had their sentences overturned and will be allowed to stay open. It is good news for the dealers... and yet the math remains the math: strorefronts have got to go.

[Source: Automotive News, sub. req'd | Photo by MARK RALSTON/AFP/Getty]

GM grants reprieve to 30 dealers, reviewing more originally appeared on Autoblog on Thu, 11 Jun 2009 10:29:00 EST. Please see our terms for use of feeds.

Read | Permalink | Email this | Comments]]>bankruptcydealerdealersdealershipdealershipsfinancialsgeneral motorsGeneralMotorsgmgm bankruptcyGmBankruptcyThu, 11 Jun 2009 10:29:00 EST<![CDATA[Dealer Bailout: Chrysler to redistribute all new inventory]]>http://www.autoblog.com/2009/06/08/dealer-bailout-chrysler-to-redistribute-all-new-inventory/http://www.autoblog.com/2009/06/08/dealer-bailout-chrysler-to-redistribute-all-new-inventory/http://www.autoblog.com/2009/06/08/dealer-bailout-chrysler-to-redistribute-all-new-inventory/#commentsFiled under: , ,



After the suggestion of Congressional hearings on the matter, Chrysler's Jim Press assured Senator Kay Bailey Hutchison (R-TX) that Chrysler dealers with leftover inventory after June 9 would "receive a fair and equitable value." It appears that Chrysler is making good on that promise.

The company's head of sales, Steven Landry, outlined the measures being taken to relieve shuttered dealers of their wares and remunerate them for it. Of the 42,000 cars held by the 780 dealers whose franchises were nixed, 26,000 of them have been sold. The rest, save for 220 cars, have been assigned to be moved to dealers that are still in business. Those last 220 cars are in the possession of dealers who haven't yet agreed to Chrysler's plan, but the cars already have new dealer homes waiting if and when things are agreed.

As for payment, after the cars arrive at their redistribution point, the new dealer's finance company will pay off the old dealer's finance company for an inventory acquired, save for $350 in destination fees. All else, according to Landry, including holdback and advertising funds, will be repaid. There is at least a little good news to start the week...

[Source: Automotive News, sub. req'd | Photo by Scott Olson/Getty]

Dealer Bailout: Chrysler to redistribute all new inventory originally appeared on Autoblog on Mon, 08 Jun 2009 17:27:00 EST. Please see our terms for use of feeds.

Read | Permalink | Email this | Comments]]>bankruptcychryslerchrysler bankruptcychrysler dealersChryslerBankruptcyChryslerDealersdealerdealersdealershipdealershipsfinancialslegalMon, 08 Jun 2009 17:27:00 EST<![CDATA[Chrysler bankruptcy taken to Supreme Court by unhappy shareholders]]>http://www.autoblog.com/2009/06/08/chryslers-novel-bankruptcy-taken-to-the-supreme-court-by-unha/http://www.autoblog.com/2009/06/08/chryslers-novel-bankruptcy-taken-to-the-supreme-court-by-unha/http://www.autoblog.com/2009/06/08/chryslers-novel-bankruptcy-taken-to-the-supreme-court-by-unha/#commentsFiled under: , ,



As the movie Hoosiers amply demonstrated, Indiana natives don't quit. That's also true for three Indiana state pension funds who have fought Chrysler's bankruptcy all the way to the federal appeals court in New York and, having lost their case there, are filing papers with the Supreme Court today.

The central issue is that the funds feel Chrysler's post-bankruptcy remuneration plans have unfairly cost the funds a great deal of value by putting unsecured debtors such as the UAW ahead of the funds' claims. They are fighting the bankruptcy by alleging that the government's TARP disbursal to Chrysler was unconstitutional and that the subsequent events amount to a covert reorganization, not Chapter 11.

Yet when asked whether a Chrysler liquidation would be better for the pension funds than the Fiat deal, the funds' lawyer replied that he was looking for more remuneration for secured debtors. The filing will go to Justice Ginsburg who will decide whether to accept it at all, to handle it alone or to refer to the full court for hearing. Chrysler has until June 15 to emerge free and clear, else Fiat can walk away. And if that happens, Chrysler might owe Fiat $35 million -- which is just $7 million short of what the three Indiana funds together have invested in the Pentastar. Thanks for the tip, MM!

[Source: Automotive News, sub. req'd]

Chrysler bankruptcy taken to Supreme Court by unhappy shareholders originally appeared on Autoblog on Mon, 08 Jun 2009 08:28:00 EST. Please see our terms for use of feeds.

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On a recent episode of The Chrysler Files, customers who purchased Chrysler vehicles that were later officially certified as lemons were being reimbursed by the company with checks... that bounced. The snafu stemmed from the fact that while said claims were made before Chrysler's bankruptcy, after the automaker's Chapter 11 filing, the judge had to clear the funds to be paid from Chrysler's account. Since the judge hadn't cleared the funds, the checks were worth precisely zero dollars.

Those owners will be happy to know that the judge has finally approved Fiat and Chyrsler honoring "all warranty and lemon law obligations" for cars purchased up to five years before April 30. With the ruling, those affected will also be eligible for additional costs and attorney's fees. Of course, that news still doesn't detail when you stranded motorists can expect a check to arrive -- or when they can cash the ones they already have -- but help is on the way.

[Source: Automotive News, sub req'd]

FOLLOWUP: Chrysler, Fiat reportedly agree to honor lemon law claims originally appeared on Autoblog on Fri, 05 Jun 2009 17:58:00 EST. Please see our terms for use of feeds.

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Yesterday, General Motors and its bondholders had officially called it quits, and GM was headed for a certain and certain-to-be-rocky bankruptcy. Today, according to a company filing, The General and the necessary chunk of its bondholders have come to an agreement, and the company looks to be headed to a slightly less rocky bankruptcy.

CNN explains that GM's bondholders with $27 billion in GM debt had been offered 10% of the company in exchange for their paper. A major group of bondholders with 20% of that debt, roughly $5.5 billion, is said to have preliminarily approved the deal. One of the sweeteners that finally got them to swallow the medicine was offering all bondholders the chance to buy another 15% of the new, post-bankruptcy company "at a low price."

The other: GM won't have to repay any of the government loans it has received or that it will receive in bankruptcy, with the government taking a 72.5% stake in the company instead. The relief to the balance sheet also helped sway the bondholders. In the interim, the UAW will get a 17.5% stake, with the bondholders getting the rest. The bondholders had to agree not to fight the bankruptcy in court. Bondholders have until Saturday afternoon to officially declare their acceptance of the deal.

It has been presented up to now that the lack of a bondholder agreement is what kept GM headed toward bankruptcy. Yet even though GM supposedly has an agreement, it is still widely expected to declare bankruptcy next week. The company needs to shed its anchors and barnacles quickly - and it appears it will still take a BK will do that.

[Source: CNN]

REPORT: GM bondholders give go-ahead to revamped deal, bankruptcy still expected originally appeared on Autoblog on Thu, 28 May 2009 14:00:00 EST. Please see our terms for use of feeds.

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The situations with GM and Chrysler are beginning to look like what happens after a fumble in an NFL game: a dozen men pile on top of each other all trying to get the ball. The difference in the case of GM and Chrysler is there are far more than two teams struggling for the prize. The latest to hop on and shove a hand in is the Senate Commerce Committee, which wants the CEOs to testify "early next month" regarding the planned dealership closings.

Chrysler's sent 789 dealers eviction notices, GM is out to dispatch 1,124 dealers in the US and about 245 in Canada. The GM dealers won't have their franchises renewed as of October 2010, and are said to be staying in operation until they sell the last of their inventory. Chrysler dealers are expected to board up the windows by June 9, although Jim Press recently gave assurances that there will still be help given to those dealers after that date. The Commerce Committee isn't moved by either proposal, citing what it calls "the short and insufficient transition period given to dealerships for franchise terminations."

The hearings would be chaired by Senators John Rockefeller and Kay Bailey Hutchison, and will address what happens to dealer inventory and jobs and consumer needs like warranties and servicing. Hutchison was working on legislation to force automakers to give dealers 60 days notice before closing their franchises (which GM has done) or else go without government help. That legislation was put on hold after Press' letter, but now Nardelli and Henderson will need to go explain things to the principal in person.

For GM it's just one more thing to lump into the impending bankruptcy in-box. For Chrysler, every additional delay in sorting out its business situation only gives Fiat more of those pre-wedding jitters.

[Source: Automotive News - Sub. Req.]

GM and Chrysler CEOs called to D.C. to explain dealer closings originally appeared on Autoblog on Tue, 26 May 2009 08:29:00 EST. Please see our terms for use of feeds.

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The way things read, Porsche might not have to get a merger deal done with Volkswagen, but it would appear to be in the carmaker's best interests if it does. The holdup seems to be Porsche - since VW still doesn't know what Porsche's financial situation is, talks broke down earlier this week. VW's labor leader, who has a seat on VW's board, has also said he doesn't want to speak to Porsche again until Porsche tells everyone what it really has in mind.

Now, though, the German corporate siblings have issued a joint statement saying, "Both companies will advance efforts toward this goal in a constructive way and in mutual agreement with all the parties concerned." Still, no one knows what that means other than a commitment to keep talking - which must count for something. In the meantime, Porsche is looking for another €1.75 billion in loans ($2.43B USD) to refinance its debt, and it is also due to receive a debt rating which could give a glimpse into what's really on the books.

[Source: Reuters]

Look Who's Talking Again: Porsche, VW resume negotiations originally appeared on Autoblog on Fri, 22 May 2009 08:26:00 EST. Please see our terms for use of feeds.

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Chrysler's top ten creditors are owed about $400 million, and the top two creditors account for nearly $130 million of that. The company first in line for payment is Ohio Module, which is a subsidiary of Hyundai Mobis, which is in turn a publicly traded subsidiary of Hyundai. Ohio Module makes chassis for the Jeep Wrangler and Chrysler has run up a $70 million tab with the firm.

The next creditor is BBDO, Chrysler's ad agency, who beat out companies like Johnson Controls, Cummins and Visteon when it comes to money owed. BBDO is looking for $58 million dollars from the Pentastar, yet it is suspected that a good deal of those funds aren't actually owed to BBDO but to the media outlets from which the agency bought ad space, like local television stations. If so, that would be a huge hit for smaller affiliate outlets to take.

Although not on the top ten, the most surprising creditor recently added to the list is Bob Lutz. The amount of Maximum Bob's claim isn't known, but he has representation before the court to petitition for some sort of remuneration. Based on the line that's still forming, though, we have serious questions about his chances of recovery...

[Source: The Detroit Bureau]

Who are Chrysler's top ten creditors? The answer may surprise you originally appeared on Autoblog on Wed, 13 May 2009 17:29:00 EST. Please see our terms for use of feeds.

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