Best Week Ever?
Late last week, Chrysler filed Chapter 11 bankruptcy, and Omnicom's BBDO Detroit was listed as the second-highest unsecured creditor, with some $58+ million in outstanding invoices. Most of the dollars are believed to be for spot TV buys placed when Chrysler opted to dump it's national advertising to save money. The Chapter 11 filing gives the carmaker time to restructure under government protection from creditors. So, while Chrysler does NOT have to pay their creditors at the moment, they will still receive cash infusions from Uncle Sam. Now that is what I call the American Dream!
Like a spoiled child whose parents are too weak to say the word, "NO," Chrysler now finds that they are in great shape; safe from creditors and still receiving their billion dollar allowance. Chrysler, of course, is not celebrating...or are they? The automobile company may not be dancing, but they are acting like they've got America by the short hairs. Sadly, with President Obama's backing, they do. Thus it shouldn't seem surprising that Chrysler is launching a national, prime-time television, newspaper, and digital campaign on May 11th, 2009. The tagline for the campaign?
"We're building a new car company. Come see what we're building for you."
For us? They're building it for us? We paid for it! This move back to national advertising must mean that Chrysler doesn't need to worry about reducing their expenses anymore. Whew. And for a second there, I was worried. However, since they can afford to advertise, it must mean that money they've borrowed from investors will be re-paid in short order.
What Do You Mean You Want Your Money?
No, that's a lie. The real story is that Chrysler does not intend to repay dollars borrowed from private interests prior to government intervention. These private "investors" aren't banks, but some rather unlikely sources, like the University of Kentucky, Kraft Foods' retirement fund, the Bill and Melinda Gates Foundation, company pension funds, and teachers' credit unions. But, the Obama administration is not going to let that happen, and has even berated the companies that were willing to bet on a loser (Chrysler) as "a small group of speculators" who "endanger Chrysler's future by refusing to sacrifice like everyone else." This, despite the terms of the agreement stating that all lenders would be paid first should bankruptcy became a reality.
The Final Straw
In a final "you're screwed" from the government and Chrysler, it's now being reported that taxpayers won't see a single dollar out of the billions loaned to Chrysler. According to Monday's bankruptcy hearings:
"They're offering financing with a low likelihood of being repaid," said Robert Manzo, an executive director for Capstone Advisory Group LLC, according to the Associated Press. As part of its Chapter 11 reorganization, Manzo wrote Chrysler expects the U.S. Treasury to forgive a $4 billion bridge loan the automaker received during the Bush administration, a $300 million fee on that loan, and the $3.2 billion in financing the Obama administration approved last week to help the company stay afloat while it is in bankruptcy.
The White House stated that they didn't expect Chrysler to repay the money, either.
So Chrysler borrowed from both private and government interests, kept it all, and aren’t paying it back? If you ask me, Chrysler makes Bernie Madhoff look like a prince, and he's serving a life sentence for pulling a stunt like this...