Judge OKs Chrysler Sale
Federal bankruptcy judge Arthur Gonzalez has pulled the trigger on Chrysler’s reorganization. Late last night, Arty cleared the way for the bankrupt automaker to review and accept bids on the company’s assets. Gonzalez said there’s an “urgent need for the sale to be consummated.” What’s more, the bidding process offers the prospect of “a fair and orderly sale.” The ruling extends the bidding deadline by five days, to May 20. One week later, the judge will hold the hearing to approve the sale of assets. Not-so-coincidentally, that’s just three days before GM’s drop deadline for its
Toxicroach puts it this way: “The fat lady hasn’t sung quite yet, though she is warmed up and ready to go.” And while we wait, keep in mind that the word “bidding” is more than slightly misleading. Fiat—I mean the U.S. Treasury Department (that’s you) is the only serious customer for Chrysler’s carcass. They’re looking at scarfing Chrysler’s good bits for $2 billion.
In all, the feds are fully committed to spending $8 billion—on top of [ say goodbye to] $4 billion dollars in previous “loans”—to keep the zombie automaker vertical.
ChyrCo’s lead counsel, Corinne Ball, was positively giddy on this point, demanding (suggesting?) a cash deposit of at least $200 million (10 percent) of the Treasury Department’s proposed payment for “good” Chrysler. “We hope people do bring in a wallet,” Ball said. Meanwhile 10,000 Chrysler creditors have formed a committee to see if they can wrest $50 million from the deal.
Join the conversation
Latest Car ReviewsRead more
Latest Product ReviewsRead more
- Lou_BC Legalize cannabis for racing
- Add Lightness Range Rovers have come a long, long ways from their original concept of a gentleman's Land Cruiser. Pretty useless off road now but the wannabees will love them until the warrantee expires.
- ToolGuy 'Non-Land Rover' gets 2 bonus points for the correct use of carbon fiber in an automotive application. 🙂
- ToolGuy "a newly developed vehicle platform it says will double driving range"• Anyone know what this is about?
- ToolGuy "Toyota recommends that no one ride in the front passenger seat until an inspection or fix can be performed."• This is a good opportunity for the back seat driver in your life. 😉
Let's put this thread out to pasture with a little reality check. By now most of the non-TARP creditors have withdrawn their objections to the settlement and the ones that are left no longer have standing. What is the final outcome? Not one piece of evidence or expert opinion was submitted to support a valuation of over $2B. Nada. Nothing. None. That is significant. Now, to the subject of "future value." Future value is a theoretical construct only. It is subjective and in my experience mostly used by salespeople to justify pricing that cannot be justified in any other way. The best analogy, and one that I should have thought of earlier, is selling a used car. The price that one is willing to pay for a used car is what you think the value is today. You could say that the value should be lower since it is very likely that the car will depreciate. Will the seller accept that? Probably not. The seller will say that the value of the car is what it is worth on the market today; what the value might be tomorrow is irrelevant. If you're selling a car, Landcrusher, are you going to discount your price based on what the buyer thinks the future value is going to be? I think not. Just to take it a bit further, let's say that I'm buying Landcrusher's car to use to deliver pizzas. Since I will be making money through the use of the car, Landcrusher might argue that the car is worth more than the value today. Do I buy that? Not a chance. The idea is the same whether it is a used car or a used car manufacturer. The "future value," whether higher or lower, is simply not of consequence when establishing the purchase price. Where future value is of consequence is when deciding to make the purchase in the first place. Then, the "future value" is called ROI, or Return On Investment. Calculating ROI is a black art in itself, though the value proposition for Fiat is fairly clear. It just may not work.
Wow, how can you not get it? Can you use the car before you buy it? No. So the value you plan to get will be in the future. The market value of a car is set buy how many people want to own one versus how many want to buy one and how much they are willing to pay. The buyer may want to use it to get to work for a few years, to haul loads for pay, or to flip for a profit. All those things are future values. You and Pch seem to think that the people that write the blue book make those numbers up! At any rate, different assets appreciate or depreciate whether used or not used or a combination of those things. I wouldn't sell you a car if the only value you would get was negative unless you acted like a total jerk. I know sales people who would though. Let's say that all the cabbies are losing money. It's going to be hard to sell a cab. However, the value of that cab TODAY - the LIQUIDATION VALUE - will reflect the value that cab will bring to the potential buyers in the future.