The Motley Fool Discussion Boards
Stocks D / Dana Holding Corp.
|Subject: Re: Bankruptcy revisited...||Date: 3/9/2006 6:41 PM|
|Author: Jazzenjohn1||Number: 111 of 111|
It seems the new way to do business in the U.S. is to announce a restatement of earnings which puts investors on edge.
Pay creditors early and even forward to create a cash flow shortage and to keep goodwill after the forthcoming bankruptcy announcement.
Devalue the business by understating the value of assets, like K-Mart with it's stores (they are selling them at triple the value they claimed they were worth when filing bankruptcy) and here with Dana by taking a nearly billion charge for their deferred tax assets (although they still can use them).
When the shares plunge from these actions announce the hiring of a bankruptcy firm, the inability to make a bond payment, or the inability to pay a creditor you didn't want to keep because of the created cash flow shortage. Once the trading is halted from these announcements you can claim bankruptcy.
Once the shareholders are removed from the picture you still have the same company, same contracts, same machinery and buildings, but now have complete ownership. You have effectively taken the company private at near zero cost. Next is to reduce costs.
Claim labor and medical rates are too high and recind the contracts. dump the pension on the PBGC. Being "bankrupt" the contracts with employees can be nullified at will.
Now, with the company private, shareholder equity eliminated, pensions eliminated, and labor costs reduced, this is the new standard. Other competitors must conform to this new model or they will suffer.
Collect the companies into a group like the International Automotive Components Group and then sell them to an offshore company like Wilbur Ross and Steve Miller did with the International Steel Group.
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