Eideard

Sugarcreek, Ohio – This village is as sweet as its name. Main Street climbs gently from a tidy railroad crossing, past a few gift shops to the simple brick First Mennonite Church…

This postcard from a gentler and simpler America is about as unlikely a place imaginable for the news that broke in September: one of Sugarcreek’s own, a prominent member of what some people here call the Plain Community, was under arrest, accused by federal prosecutors of running a Ponzi scheme that betrayed his neighbors’ trust and wiped out more than $16 million of their savings.

The news media made the obvious comparisons…

But the most intriguing aspect of Monroe Beachy’s story is how different it seems from Bernie Madoff’s — and from almost every other story with a “Ponzi scheme” headline over the years.

While victims of Mr. Madoff’s fraud, like most Ponzi victims, condemned their accused betrayer in court as a monster, many of Monroe Beachy’s investors have said in court that it is more important to forgive him than to recover their money.

While the Madoff case and others like it have inevitably created conflict between longtime investors fighting to keep their fictional profits and more recent investors trying to recover lost principal, some Beachy investors urged that their own share of his estate should be given to those in greater need.

And while Mr. Madoff’s wife and sons instantly became social pariahs in Manhattan, Mr. Beachy’s wife and children remain at his farmstead here, living peacefully with their neighbors…

It became the forum for a rare bankruptcy court battle over religious freedom, with Mr. Beachy’s Amish and Mennonite creditors insisting that the court’s way of dealing with his downfall could not be squared with their faith or with his…They formed their own committee to resolve the crime. There were two confounding contradictions: [1] all the creditors were not members of their faith and bound by the same methods or conclusions; [2] we still live in a constitutional republic where civil law takes precedence over religious rote.

Last March, Federal Bankruptcy Judge Russ Kendig in Canton, in the federal courthouse closest to Sugarcreek, ruled that “delegating insolvency proceedings to a religious body” would be unconstitutional…

No part of this story contrasts as sharply with the real Bernie Madoff case as what happened next…

“We are agreed among ourselves to accept your ruling as the will of Almighty God in this matter,” they wrote, after thanking him for considering their point of view so carefully. “If there is anything which we can do as members of the Amish-Mennonite community to facilitate the bankruptcy process and help bring it to a speedy conclusion please do not hesitate to contact any member” of the committee.

Unlike most American flavors of fundamentalist religion, these folks recognize and respect the law of the land over their religious beliefs. They call it God’s Will. An interesting way around the contradictions of their belief system; but, it leaves our constitution intact and doesn’t waste months and years trying to wear down the court system.

RTFA. It is a long and convoluted tale. One not without illustrations of every human frailty – even for folks who assay that frailty results from the supernatural.

Click on picture to enlarge

Hostess Brands, maker of Twinkies and Wonder Bread, is seeking bankruptcy protection, blaming its pension and medical benefits obligations, increased competition and tough economic conditions.

The Chapter 11 filing on Wednesday comes just two years after a predecessor company emerged from bankruptcy proceedings. That company, called Interstate Bakeries and based in Kansas City, Mo., filed for bankruptcy protection in 2004. It emerged in February 2009…But Hostess said Wednesday that previous efforts to produce incremental change, including the previous Chapter 11 bankruptcy reorganization, were insufficient…

RTFA for all the excuses.

The privately held company, based in Irving, Texas, said it will be able to maintain routine operations thanks to a $75 million financing commitment from a group of lenders led by Silver Point Capital…

The company said it does not anticipate any disruptions in production or delivery of its breads or cake products and said its popular brands, which also include Drake’s, Ding Dongs and Ho Hos, will still be available.

Until they run out of suckers buying crap to consume.

Hostess said it is looking to “create a sustainable cost structure with competitive employee benefit plans.” It also hopes to modernize its systems, fleets and plants to keep pace with customer needs.

“This company has tremendous potential if we can remove the barriers to success,” Driscoll said.

Another Mitt Romney-style tale of private equity investment “creating jobs”. During the previous bankruptcy – well before the Great Recession – they convinced unions desperate to retain jobs to cut pay, invest union funds including employee pension funds in the corporation. They were the biggest investors and received only a guarantee of no layoffs.

Meanwhile, relying on the American sugar addiction – a destructive habit at least as unproductive as our oil addiction – they continued to market crap food with about as much nutrition as dust bunnies.

A row has erupted in the United States centering on the ownership of a gay teenagers’ database.

The owner of XY Magazine and its associated website – which catered for young homosexual boys – filed for bankruptcy earlier this year. XY’s creditors have applied for the firm’s one remaining valuable asset: its database of one million users. But the Federal Trade Commission has expressed its concerns and said the sale “could violate Federal law”.

The issue of selling databases is not new, but it is the sensitivity of this particular database that is catching the attention of lawmakers.

The list contains details of tens of thousands of young men, the majority of whom will be gay.

Writing on the technology blog Read Write Web, Curt Hopkins summed up the concern felt by many users.

“The selling off of private information, gathered under the supposition of privacy, is bad enough,” he wrote.

“Even worse if you’re forced into it.

“And positively untenable when the information is connected to kids who are dealing with a dawning sexual reality that in some instances is even more fraught than what straight kids go through,” he added.

The point is made by a UK commentator that “information shouldn’t be used for a purpose other than for which it was originally intended.” Hard to administer or enforce in the era of data-mining. A process which – in and of itself – is free of value judgements.

However – the big word – when you add the context of many societies governed by ideologies ranging from dislike to hatred, fear to bigotry, questions of privacy originally guaranteed by an online contract should be substantial. And pre-eminent.

Fiat Bravo starts at prices below Saturn in Europe

Chrysler has secured court approval to sell most of its assets to a consortium led by Italy’s Fiat. The move, which is backed by both the US and Canadian governments, should enable Chrysler to exit bankruptcy protection in the near future.

Under the terms of the deal, Fiat will control 20% of Chrysler, while 68% will be owned by a union trust, and the two governments will share 12%.

It comes as General Motors is about to file for its own bankruptcy protection.

Under the terms of the Fiat-led deal, creditors holding $6.9 billion of Chrysler debt will receive only $2bn. However, 90% of them backed the deal.

Fiat is not paying anything for its 20% stake, which will give it access to the US car market. It has the option to increase its shareholding in Chrysler in the future. In return, Chrysler will be able to take advantage of Fiat’s expertise in making smaller, more fuel-efficient cars in its existing US factories.

The introduction of much of the broad Fiat line should get some factories back up to production. Though part of the equation depends on Americans learning from changing world circumstances and refusing to dash back to gas guzzlers every time the price of gasoline drops 5¢ a gallon.

I’ve said it enough times. An old geezer like me really doesn’t need to buy another car unless I figure on living to 100. Though I could be tempted by a Dakota pickup with the 3-litre Cummins turbo-diesel – or smaller.

Daylife/Getty Images used by permission

As General Motors heads toward insolvency, the company that was once the biggest on the planet is still riding high in the world’s most populous country.

As the storied American company prepares to financially dismantle its operations between good and poor performing assets, GM China is becoming the crown jewel in the company’s operations.

“If there’s a good GM and a bad GM, China is definitely going to be in the good GM side,” said Michael Dunne, an auto analyst and managing director of J.D. Power and Associates China…

Industry analysts say the decision is a simple matter of dollars and cents: GM is now the third-biggest car manufacturer in China, which has recently overtaken the U.S. as the world’s largest car market…

Read the rest of this entry »

Still my favorite Chrysler product

Q. Will Chrysler cease to operate?

A. No. Chrysler is reorganizing under Chapter 11 of the United States Bankruptcy Code. The law allows companies to shed assets, restructure debt, cancel contracts and close operations that normally would have to continue running. Once they secure financing to leave bankruptcy, these companies are reconstituted as new legal entities…

Q. How long will this take?

A. The Obama administration spoke of a “surgical bankruptcy” which it said could be completed in 30 to 60 days. It plans to use Section 363 of the bankruptcy code to sell assets, rid the company of liabilities and restructure its debt, creating a new Chrysler…

Q. What happens to Chrysler dealers?

A. Chrysler Financial will cease making loans for Chrysler vehicles; GMAC, with support from the government, will provide financing for Chrysler dealers.

Q. What happens to Chrysler employees?

A. The White House said it did not expect any reductions in white- or blue-collar jobs as a result of the bankruptcy. However, Chrysler employees who are not union members do not have any job security.

RTFA for details – though it’s just a starter. Chrysler-Fiat merger is on. That bodes well for Chrysler dealers who will begin to pick up salable, economical small cars.

Cripes – I would even consider adding a Fiat 500 to the family fleet though I’m still holding out for a Dakota Pickup with the Sprinter turbo-diesel.

Daylife/AP Photo by Peter Kramer

Trump Entertainment Resorts, the casino group founded by Donald Trump, has filed for bankruptcy protection in the face of multi-billion dollar debts. Trump Entertainment missed a $53m interest payment due on 1 December.

Donald Trump announced his resignation from the firm’s board last week, due to disagreement with bondholders. Mr Trump said in a statement that he was leaving amid “internal turmoil” that was being “compounded by dramatically deteriorating revenues”.

According to reports, Mr Trump had resisted bondholders’ plans to force the firm into Chapter 11.

In 1992, Trump’s Atlantic City casinos filed for Chapter 11 after buckling under the weight of $1bn in debt. He later regained control of those properties.

He has a hell of a track record, doesn’t he?

A Merrill Lynch analyst put out some groundbreaking research on GM claiming that bankruptcy was an option for the auto company. He reversed his prior buy recommendation (issued in February 2007 when the stock was at $40) and cut the stock to an “underperform” now that it is trading below $11. I’m not quite sure what caused the analyst to change his formerly bullish opinion. Perhaps it was based on one of the following reasons?

* GM’s debt is trading and has been trading at distressed levels for some time.

* GM’s credit default swaps are already pricing in a 75% probability that the automaker will default on its debt within the next 5 years.

* Car sales have been in a steep decline and the auto industry just reported a roughly 20% decline in sales for the month of June.

* GMAC, the financing arm still 49% owned by GM, had to completely restructure its financing because its mortgage lending arm ResCap came dangerously close to declaring bankruptcy.

* GM’s stock is down 56% year to date.

* The analyst needed to change his recommendation ASAP so he could tell everyone that he warned them of GM’s bankruptcy, thus justifying his existence.

K10 asks, “Who are the investors that use Merrill Lynch as their sole source of news?”

What’s left to discover?