Wild Ass Rumor of the Day II: Cerberus to Sue Daimler
Cerberus may be positioning itself to sue Daimler for unfair business practices. They could do so– after filing for Chapter 11 bankruptcy protection– under a claim of "fraudulent conveyance." Rather than turn this into a boring law seminar– and God knows I'm an expert on that front– let's just say that the provision in question (or not) is part of the U.S. bankruptcy code designed to stop management from hiding capital from creditors. Here's the twist: Cerberus could use fraudulent conveyance to claim that the Germans cooked the books, sneakily selling them a business they knew wasn't "a going concern." While Cerberus wouldn't get a full refund, every little bit helps AND it would be a genuine PR coup, protecting Cerberus' rep (tricky German bastards). There are a couple of caveats. First, that small matter of filing for bankruptcy. Second, Daimler could be protected by a statute of limitations, whose term depends on which country's laws govern the terms of the original sale. I'm still checking, but it appears that it's a U.S. deal, giving Cerberus a year from the transaction's conclusion to file and bite Daimler's ass. Hang on; this could get seriously weird.
Immensely bored law student. I've also got 3 dogs.
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The problem is, IIRC, Cerberus didn't so much buy Chrysler as Daimler paid them to take it off their hands.
***Standard IANAL disclaimer*** If a lawsuit was filed, could it just be a "give us some money to go away" suit, since it's not clear that Cerberus could win it? After all, two well-heeled companies can afford a lot of litigation, but after a while the billable hours start to add up, not to mention that Cerberus doesn't really have to worry about its good name, but Daimler has to worry about Mercedes having a bad image.
jthorner, I would guess that the odds of winning a lawsuit would be poor as well especially if Daimler was even the least bit careful. Due diligence is not nearly the open book process it sounds. I've been through enough of these on both sides to know you carefully select, filter and review everything you provide. Daimler should have stamped "unaudited" or "draft" on every current non-public info they provided.
"I’ve been through enough of these on both sides to know you carefully select, filter and review everything you provide. " I've been through a few as well and I understand your point. Often the lack of thoroughness is due to impatience on both sides of the deal to "get 'er done". I still don't think Cerberus has much of a chance of prevailing in any court action. Nothing that is going on a Chrysler right now looks like it is the result of deep dark secrets which were hidden from the buyer. Now Cerberus knows how many Chrysler customers feel: "Wow, this thing isn't quite the great deal I thought I was getting!" Just wait till they try to trade up in 3 years ... yihaha.