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XDCX 04-02-2019 02:20 PM

Let the Trial Begin...
 
Let the Trial Begin...

http://i66.tinypic.com/rr47qv.jpg

Well it's been almost a decade and the lawsuit by a select group of the 789 OLDCO Terminated Dealers against the U.S. Treasury will finally begin.

I wanted to create this thread where our members could share their thoughts as the trial progresses and testimony is heard. I'll also share my thoughts on this case and welcome feedback from our members - whether you agree with my thoughts or reject them.

XDCX 04-02-2019 03:07 PM

Personal Disclosure
 
Before I share my thoughts in this thread I wanted to make two important details clear:

First, I have no idea what the plaintiff's attorneys will be presenting as it relates to their case against the U.S. Treasury. I have no inside information.

Second, I don't consider myself to be an "expert" as it relates to this case or anything else that involves a court proceeding - this is just an expression of my thoughts/opinions.

XDCX 04-02-2019 03:25 PM

Looking back 10 years ago...
 
I think to fully understand what happened to the 789 it's necessary to revisit the "perfect storm" that brought Chrysler and GM to bankruptcy.

In my assessment there were essentially three storms that collided and brought the auto industry to a sales level that wasn't sustainable and resulted in a massive hemorrhage of cash.

The first storm was the collapse of the U.S. Housing Market. After being fueled by years of easy lending "No-Doc" mortgages the market turned quickly as foreclosures started to drive down home values. In some markets the value of a recently sold home dropped by 50% or more and even people who could afford their mortgage were walking away from their negative equity. The impact to the auto industry was a massive decrease in personal wealth and an increased pool of customers who damaged their credit to the point they were no longer able to buy a new vehicle.

The second storm was a rapid spike in fuel prices - gasoline at $4.00+ was common. The impact to the auto industry was less disposable income for their pool of customers and a drastic decrease in demand for trucks and SUVs.

The third storm was a rapid decrease in available liquidity for banks and auto finance companies to write new auto loans. The debt markets were in crisis because it had become clear that bond ratings were worthless because many of those "No-Doc" mortgages were actually bundled with other mortgages and sold as AAA debt. The impact to the auto industry was a shortage of funds to write new loans and higher interest rates.

XDCX 04-02-2019 03:36 PM

President Obama didn't create the problem, it happened before his watch...
 
While I'm no fan of President Obama I think it's only fair to acknowledge that both Chrysler and GM were in a deep state of crisis before he took office. President Bush essentially "kicked the can down the road" and supplied Chrysler and GM with enough bailout funds to keep them alive until President Obama took office.

That said, I think it's President Obama's heavy hand and predetermined set of winners and losers that will allow the plaintiffs to win their case.

In my opinion the President felt he had the power to do whatever he wanted and he was going to protect the people who supported his presidency and political party. The UAW would win, Cerberus and the bond holders would lose and 789 dealers would be slaughtered just to demonstrate that all factions of Chrysler had felt some pain.

XDCX 04-02-2019 03:46 PM

200 years of bankruptcy law tossed out the door...
 
As evidence of my theory that President Obama had predetermined who would win and who would lose at it related to Chrysler's bankruptcy, I look to the fate of the Chrysler bond holders.

In U.S. Bankruptcy law it's been held for 200+ years that bond holders have a senior position when it comes to the remaining assets of a bankrupt company.

Despite their senior position the Chrysler bond holders were pressured into taking losses. In theory the UAW should have lost everything before the bond holders lost their first penny but that wasn't the case with Chrysler's bankruptcy. Essentially, 200+ years of bankruptcy law was tossed out the door and the U.S. Government was operating like a "Banana Republic" where the rules to game were being re-written every day.

XDCX 04-02-2019 04:01 PM

It was Jim Press' fault...
 
When Cerberus first hired Jim Press from Toyota I was impressed - I thought it was a fantastic hire.

As time would pass, however, I increasingly saw Jim Press as an untrustworthy person who would say whatever he needed to say to get what he wanted.

My theory is the President wanted to bailout the UAW and didn't care about anything else. That said, he knew he needed a believable story on why the U.S. Government should bailout Chrysler. How would the NEWCO version of Chrysler survive if the OLDCO version died?

At some point I remember reading or hearing that the fate of the 789 was essentially Jim Press' fault. Press apparently made some comment that Toyota had fewer dealers than Chrysler did and the Auto Task Force picked up on that as being part of their NEWCO solution.

The Auto Task Force would try to convince the public that NEWCO was a more viable company because it had fewer dealers just like Toyota.

In my opinion, Chrysler's management didn't care what they had to do to get the Government bailout money and agreed to do whatever the Auto Task Force deemed necessary. If Chrysler needed to slaughter 789 dealers to get the bailout money then that's what they'd do.

XDCX 04-02-2019 04:13 PM

Only the uninformed would think that dealers cost an OEM money...
 
In my opinion, perhaps the most compelling example that the 789 were terminated due to a demand from the Auto Task Force/U.S. Treasury lies in the fact that only the uniformed would think that dealers cost an OEM money.

Anyone who has spent even a little time in the OEM/Dealer environment knows that dealers don't cost an OEM much money, by contrast they're a source of revenue and to a large degree the more the better.

Chrysler charges their dealers for sales and management training, sales and marketing materials, special tools, signage and branding, DealerConnect access, etc.

Killing off dealers, especially rural dealers, would be illogical and there's no way Chrysler's management would have killed off the 789 unless they were forced to do so.

XDCX 04-02-2019 04:22 PM

AutoNation's Mike Jackson drops a Truth Bomb...
 
I remember an interview where AutoNation's Mike Jackson commented he was surprised that Chrysler killed off so many rural dealers because those dealers were a strategic asset. There were countless rural markets where Chrysler and the other domestic OEMs had a very high market share and the reason could be attributed to the strength of the local dealer, not the strength of the brand of vehicle.

I also recall that Lee Iacocca commented in one of his books that the rural dealers were key to Chrysler's survival because they tended to be more stable/resourceful during economic downturns when OEM most needed support from their dealers.

conn02 04-03-2019 08:29 AM

Great thread starter and welcome back. I am on both sides of this, kept my Chrysler franchises (one very rural) and lost my GM franchises (also very rural). looking forward to the drama unfolding. Lost lots of good friends in the 789

steve_biegler 04-03-2019 11:38 AM

Yes welcome back! You have been missed.

This is going to be very interesting. I will say I'm surprised this has come to pass. Hard to believe a decade anniversary will pass during the trial if it lasts as long as they think.

Go back in "The Forum" archives and read some of the posts. It's painful but a great reminder of what was happening. Maybe Xman can put a link to some of them. I'm not smart enough to know how.

I also look forward to comments as this plays out.

DealerEx 04-03-2019 09:10 PM

Quote:

Originally Posted by XDCX (Post 39015)
I think to fully understand what happened to the 789 it's necessary to revisit the "perfect storm" that brought Chrysler and GM to bankruptcy.

In my assessment there were essentially three storms that collided and brought the auto industry to a sales level that wasn't sustainable and resulted in a massive hemorrhage of cash.

The first storm was the collapse of the U.S. Housing Market. After being fueled by years of easy lending "No-Doc" mortgages the market turned quickly as foreclosures started to drive down home values. In some markets the value of a recently sold home dropped by 50% or more and even people who could afford their mortgage were walking away from their negative equity. The impact to the auto industry was a massive decrease in personal wealth and an increased pool of customers who damaged their credit to the point they were no longer able to buy a new vehicle.

The second storm was a rapid spike in fuel prices - gasoline at $4.00+ was common. The impact to the auto industry was less disposable income for their pool of customers and a drastic decrease in demand for trucks and SUVs.

The third storm was a rapid decrease in available liquidity for banks and auto finance companies to write new auto loans. The debt markets were in crisis because it had become clear that bond ratings were worthless because many of those "No-Doc" mortgages were actually bundled with other mortgages and sold as AAA debt. The impact to the auto industry was a shortage of funds to write new loans and higher interest rates.

Your analysis is accurate but the third storm you bring up brought about a 4th storm for the auto makers that resulted in the bailout. In January of 2009 three of the four largest investment banks in the world went under. The largest mortage lender in the country failed. Several large banks in California failed when they had runs on them when the extent of their exposure to the real estate market was revealed. All the large banks were terrified that they could face a run also. They pulled in their horns and went into survival mode and canceled all their revolving lines of credit for the automakers. In September 2008, GM and Chrysler were sitting on the largest cash reserves they had ever had, and weren't worried about the downturn initially. They calculated they had enough cash to ride out a cyclical downturn for 2 to 3 years based on past recessions. They never dreamed that their operating credit lines would be pulled. Instead of burning cash at a rate of 1-1.5 billion a month, they suddenly had to come up cash to pay their normal operating expenses on top of R & D and capital projects. That had never happened before. ALL the operating expenses they normally just paid interest on, now had to be paid out of cash reserves and Chrysler was burning thru an extra 3-5 billion in cash per month on top of the normal expenses and GM was swallowing 6-7 billion a month. By the end of November they realized they could run out of money in 6 months. They were in uncharted waters at that point.

The StraightShooter 04-07-2019 11:51 AM

There was so much fraud and theft that took place. The initial list was larger than 789. CFC intervened because they could not afford or did not want the losses. That's why you had stores such as Ken Zangara and White CJD who were already bankrupt not be part of the cuts. Similarly, Krebs Dodge was on the list but miraculously were allowed to remained open. Worse, CFC went to their floorplanned stores that were cut and demanded a walk away extortion amount of money for future charge backs and losses. They forged assignment of assets forms and would not release UCC liens unless you paid them. It made getting floorplans near impossible after you were cut. They were mining data from DMS and CRMs too and calling customers to tell them their dealer had closed even when they did not. Also, look who got terminated points. Look who eventually was given a top spot at McClarty Sanders. It was a gigantic fraud. I am forthright that many of those people at Chrysler and the Treasury deserve to die agonizing and painful deaths. Unfortunately I don't see much justice out of the case. The government can be found guilty here but that doesn't mean money for anyone. Look at the AIG case. Also if you look at Chrysler and GM dealer network in the 10 years after the bks you can see it fully contradicts Urban Sciences testimony and reports. I pray for everyone that at least discovery on this trial will be made public. These were rotten human beings

srt 04-09-2019 06:49 PM

Long time coming
 
The above comments really hit the nail on the head. Let's hope the judge see's it that way. I don't trust the justice dept. lawyers at all. I remain hopeful that some form of justice will finally surface.

steve_biegler 04-12-2019 06:53 AM

As I watch the trial progress, I am amazed at the automotive knowledge of the dealers that have testified so far. I should't be. Old car guys that understand the business and are survivors of many ups and downs in the business.

Only a day and a half into the videos. I think I know what I'll be doing this weekend.

Stay tuned!

possum 04-13-2019 05:51 AM

All the comments are spot on, and I fully understand, and feel the pain. At this point, today, I don't know if I'm even ready to live thru all the lies and corruption again. But, I'm pretty sure I'll get geared up as it goes along!
By the way, I'm still waiting for my call, or visit, with Jim Press.

The StraightShooter 04-15-2019 03:13 PM

From what I understand Jim Press only draws a paycheck from from the BET auto group. A complete figure head with no role/power as President

steve_biegler 04-16-2019 05:54 AM

Quote:

Originally Posted by The StraightShooter (Post 39028)
From what I understand Jim Press only draws a paycheck from from the BET auto group. A complete figure head with no role/power as President

Not a surprise to anyone here on the Forum. I think most, if not all of us wonder why he is employed ANYWHERE! A total POS.

DealerEx 04-16-2019 06:49 AM

Well every big corporate group needs someone they can go to who has the proven ability to lie shamelessly with a straight face in case they involved in media intensive PR situation. Without a doubt Jim Press has proven his ability in that regard. :rolleyes:

DealerLaw.com 04-16-2019 02:01 PM

Today was a very good day in court. Rattner testified that the Government orchestrated the terminations.
While Chrysler made the selections, the point is that the Government made the closures a condition of the bailout.
We have several weeks to go and the Government has highly skilled lawyers but so far the case is going in nicely. Regards to all, Len Bellavia

steve_biegler 04-17-2019 07:06 AM

Quote:

Originally Posted by DealerLaw.com (Post 39031)
Today was a very good day in court. Rattner testified that the Government orchestrated the terminations.
While Chrysler made the selections, the point is that the Government made the closures a condition of the bailout.
We have several weeks to go and the Government has highly skilled lawyers but so far the case is going in nicely. Regards to all, Len Bellavia

You are doing a wonderful job! I am part way through Thursday testimony and am resisting the temptation to jump forward. Keep up the good work!! THANK YOU!

57years 04-29-2019 10:20 AM

Any Updates? Are there any detailed postings or evidentiary court filings available (via link)? Thanks,

steve_biegler 04-29-2019 02:41 PM

I've been watching the links and have just started with RATtner testimony. Family, grandpa and work duties has slowed my watching time. I'll post after I finish listening to the rat. So far it seems to be very good for the dealers. The Attorneys are doing a good job.

DealerLaw.com 04-30-2019 06:56 PM

Status report
 
Tomorrow Nardelli testifies to be followed by Landry and Grady.
Bloom was neutralized. So far we are happy with the progress of the case. Should conclude at the end of next week. Then post trial briefs which will take a couple of months so there will not be a verdict for a little while.
Very happy to see so many dealers in the courtroom to lend support.

Regards to all, Len Bellavia

steve_biegler 05-01-2019 05:33 AM

Quote:

Originally Posted by DealerLaw.com (Post 39035)
Tomorrow Nardelli testifies to be followed by Landry and Grady.
Bloom was neutralized. So far we are happy with the progress of the case. Should conclude at the end of next week. Then post trial briefs which will take a couple of months so there will not be a verdict for a little while.
Very happy to see so many dealers in the courtroom to lend support.

Regards to all, Len Bellavia

Thanks for all the work you and your staff has put in. It is appreciated more than you know by all the dealers involved.

flstsphil 05-10-2019 07:07 AM

I attended the last two days of the trial. Saw Lasorda testify along with a couple of business valuation professor types. Our side cross examined the witnesses. Len did an outstanding job cross examining one of the professors and I do not think the others hurt us.

My understanding is that the Judge gave each side instructions for post trial briefings after I left. Each side has a couple of months to prepare the briefings, giving her the information she needs to make her decisions.

I remain optimistic.

steve_biegler 05-10-2019 12:58 PM

Quote:

Originally Posted by flstsphil (Post 39037)
I attended the last two days of the trial. Saw Lasorda testify along with a couple of business valuation professor types. Our side cross examined the witnesses. Len did an outstanding job cross examining one of the professors and I do not think the others hurt us.

My understanding is that the Judge gave each side instructions for post trial briefings after I left. Each side has a couple of months to prepare the briefings, giving her the information she needs to make her decisions.

I remain optimistic.

I've got to get caught up! I'm way behind.

steve_biegler 06-06-2019 04:45 AM

Looks like final arguments will begin in a couple weeks.

DealerLaw.com 06-22-2019 02:02 AM

The trial is finally over. A verdict will likely be issued in September or October. I will try to post links to the closings statements next week. On behalf of the 789 thank you all for your support.
- Len

steve_biegler 08-12-2019 06:14 AM

Just finished Nardelli's testimony. Didn't remember much, surprise surprise. How these people get the positions they have is beyond me. Next up is the head of Chrysler Canada. Bet he can't remember much either.

steve_biegler 08-26-2019 08:06 AM

About an hour into Landry's testimony. Kind of funny listening to him try to explain MSR. Looks as though he didn't even understand it.

flstsphil 10-03-2019 08:07 AM

We lost the case.

steve_biegler 10-03-2019 09:55 AM

When did the verdict come down?

flstsphil 10-03-2019 11:32 AM

October 3 2019. This morning. Len says they are deciding whether to appeal or not. His letter does not sound optimistic. Judge said we did not meet burden of proving that (a) Chrysler did not act voluntarily and was coerced into both filing for bankruptcy and rejecting plaintiffs' franchise agreements and (b) their franchise agreements would have had value in a "but for world" without Government assistance.

steve_biegler 10-03-2019 12:18 PM

Did the letter come in e-mail form? I didn't see it.

DealerEx 10-03-2019 09:48 PM

Quote:

Originally Posted by flstsphil (Post 39058)
October 3 2019. This morning. Len says they are deciding whether to appeal or not. His letter does not sound optimistic. Judge said we did not meet burden of proving that (a) Chrysler did not act voluntarily and was coerced into both filing for bankruptcy and rejecting plaintiffs' franchise agreements and (b) their franchise agreements would have had value in a "but for world" without Government assistance.

What world does that judge live in?? (a) Both GM and Chrysler were told by the Auto Task Force they needed to close 30% of their dealerships after they had "benchmarked" every aspect of the way the companies were run against Toyota. The Auto Task Force was in charge of restructuring and overseeing the operation of both Chrysler and GM. They had to agree to the terms the government set if they wanted the bailout money. Sounds like the definition of coercion to me. (b) Looks like all they needed to do was look at buy-sell agreements that took place 18 months after the bailout and see what GM dealers were able to do because they had 18 months to wind down, and a large number got there franchises"un-terminated" when the arbitration board was set after the Senate hearings 12 months later. After the Chrysler dealers had already been closed - and in many cases, had their franchises gifted to factory favorites. Those GM dealers are either still operating or got so disgusted they sold out rather than continue doing business with a company that made it clear they did not want them.:mad:

flstsphil 10-04-2019 06:09 AM

Notification was sent by email to all plaintiffs. If you were a plaintiff and did not get notification call your lawyer.

srt 10-04-2019 08:37 AM

Trial
 
Justice is alive and well. Must admit as time went on I had a feeling this may be the result. Doubt I could live with an appeal.

steve_biegler 10-04-2019 09:29 AM

Quote:

Originally Posted by flstsphil (Post 39061)
Notification was sent by email to all plaintiffs. If you were a plaintiff and did not get notification call your lawyer.

Got it this morning. I need to get my wits about me before I start my tirade. This is almost worse than ten years ago. A GODDAMN Judge couldn't or WOULDN'T see the truth.
I need to stop now.

steve_biegler 10-04-2019 09:31 AM

Quote:

Originally Posted by srt (Post 39062)
Justice is alive and well. Must admit as time went on I had a feeling this may be the result. Doubt I could live with an appeal.

Justice is alive and well??
WTF??

DealerEx 10-05-2019 10:19 PM

Quote:

Originally Posted by steve_biegler (Post 39064)
Justice is alive and well??
WTF??

I think SRT was being sarcastic about Justice


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