Getting Nailed v Getting Screwed

Observations on how the courts, at least in the case of one of the biggest bankruptcy actions to ever grace the docket, can mean less about fairness and justice and more about power and where one stands in line.

It is worth noting that auto dealers, on the whole, don't really get a lot of love from us. Granted, car salesmen do rank higher on the public confidence scale than Congress but that's not much. The events of the past couple months may be changing that vision.

Enter the bankruptcy of Chrysler, and soon to come General Motors. Spurred on by the rotten economy, management decisions to keep cranking out inventory even though buying ground to a halt, union contracts once the builder of the middle class and now decried as the last straw to topple American auto power -- the perfect storm leaves entire classes of people who put their money where their mouths were on the sidelines, holding the bag.

The State of Indiana is fighting back, noting the public pension funds that backed Chrysler shouldn't be shoved to the back of the bankruptcy bus behind the nation's taxpayers and the union who stand to benefit if Chrysler-Fiat figures it out. They argue they shouldn't have to settle for pennies, or nothing, on their investment. One can also argue the decision to pour millions into Chrysler stock on behalf of the Hoosier State's public workers wasn't made under duress, and the owners of the company (shareholders) knew the risk of ownership. With reward comes risk, and the profit potential has an alternative - flat broke. That would be called getting nailed. Their choices, their harvest.

Except the government, which says the billions and billions we pour into keeping Big Auto alive will be repaid to taxpayers. Someday.

In the meantime, the way a bankruptcy should work -- secured creditors in line first, all others behind -- displays a real flaw in our system.

Which brings me back to car dealers, and the getting screwed.

Only when we seriously think about life without the neighborhood car dealer do we get a real sense of how the impact comes home. And for the dealers now shoved aside, those who put heart and soul into shilling for Chrysler and GM, they have less than a week to unload inventory they won't even be allowed to sell after next Tuesday.

Putting this in perspective: you buy that hula dancer lamp at a yard sale you visited last October; you plan to unload it this summer, and yes you know you may not sell it for what you paid for it but what the hell, it at least made you laugh while gathering dust in the basement. But along comes a judge who says hold off -- you have to sell it today even though you bought it on your time, fair and square, with the understanding you could sell it when you wanted to. Or could sell it.

The double whammy for dealers losing their franchises isn't just losing the line; sales representatives have lost primary clients for years, and understand with every peak comes a valley. But these are local business people, our neighbors, people who support the Little League teams and the bowling teams and the local charities and high school sports. Along with scrambling to figure out how they're going to make a living, they can't even sell what they already own.

Unless a bankruptcy judge comes to his senses and sees that there is a bigger picture involved in this quickie divorce between an American car company and the partners who made the mistake of taking Detroit at their word.

For these local dealers to have 30 days to unload inventory they took on good faith, often as a sign of support for a company now driving the cruelest of paybacks, isn't just unfair it is un-American. These dealers took the cars with the intention of selling them. If a hardware store took possession of a truck-full of shovels wouldn't you consider it theirs to sell, even if the shovel company went belly up? At the core, how is a car any different? Inventory is inventory.

Let our good neighbors sell the goods they were sold, without penalty, just as any used-car dealer would have the same option of doing. Or tell Uncle Sam's new auto overseers to take those cars back, and roll that inventory into the already bloated pool of autos waiting for savvy consumers to see the benefit of what a fire sale really looks like.

Common wisdom is seeing how the powerful treat the meek for a true picture of character. Now is the time for those still holding the reigns of power when it comes to cars to display some character.