What Happens When Your Company Goes Belly Up

By Big Tent Democrat, Section Economy
Posted on Sat Mar 28, 2009 at 09:34:55 AM EST
Tags: (all tags)

Share This: Digg!

Earlier this week, I wrote about Jake DeSantis, who quit AIG after the bonus brouhaha. Mr. DeSantis was upset that because AIG went belly up and was propped up by the government, folks were upset with his million dollar bonus (he stated his AFTER TAX bonus was 750k). Perhaps this story can provide Mr. DeSantis some perspective:

A bankruptcy judge on Tuesday tentatively approved Delphi Corp.'s request to stop paying for health care and life insurance benefits for its retired salaried workers . . . U.S. Bankruptcy Judge Robert Drain in Manhattan ruled that the auto parts supplier has a right to change the retirees' benefits under bankruptcy law and that the cuts are justified given the company's dire finances, its troubles finding financing and the overall state of the automotive industry. "It is crystal clear to me that debtor is well within its business judgment in assuming that it will need to eliminate the projected (post-retirement benefits) liability, which is projected at $1.1 billion, in order to reorganize," Drain said in making his ruling.

[More...]

This is what happens when companies go belly up. Compared to the 15,000 Delphi retirees who are going to lose their pension and health care benefits, Mr. DeSantis' whine about losing his million dollar bonus rings hollow.

Speaking for me only

< Hundreds of NY Drug Prisoners May Be Resentenced | Spain May Reopen Criminal Investigation of Bush Lawyers Over Guantanamo >

Legal

Nothing on this site should be construed as legal advice. TalkLeft does not give legal advice.

TalkLeft is not responsible for and often disagrees with material posted in the comments section. Read at your own risk.

What Happens When Your Company Goes Belly Up | 42 comments (42 topical)

Readers Must Login or Create an Account to Comment

"Rings Hollow" (5.00 / 3) (#1)
by denise k on Sat Mar 28, 2009 at 09:44:32 AM EST

That is such an understatement that it seems almost out of place in this context. More like greedy, selfish, petty, even criminal. The disconnect of these people is breath-taking.

There are going to be many many (5.00 / 3) (#2)
by Militarytracy on Sat Mar 28, 2009 at 09:51:44 AM EST

more Delphi Corp too. For me this portion of where we are headed and what is going to transpire literally brings on a cranial explosion when our President gets on his bullhonk entitlements soapbox. He needs to step off that box before he gets robustly knocked off of it.

There already have been many (5.00 / 2) (#9)
by Cream City on Sat Mar 28, 2009 at 10:30:58 AM EST

companies doing this (as I know you know) -- some doing so to people like my spouse. And doing so to some after retirement planned with provision for health care until Medicare, Social Security, etc.

It's one reason for the health care crisis in this country and one reason for the jobs crisis, too, as retirees went into second careers -- taking more jobs that could have gone to younger people.

The situation is complex, so many problems for so many age groups interconnected. But solutions seem pretty obvious: Make companies and politicians keep promises. How to make them do so -- now, that's more complex again. . . .


I want more quality of life (5.00 / 3) (#11)
by Militarytracy on Sat Mar 28, 2009 at 10:44:51 AM EST

verses where unbridled capitalism has led us. I want 40 wk weeks keeping families going and no more than that needed period! I want sick days, child care, and I want our people retiring at 65 again and earlier if they want for less benefit. I'm so pissed anymore. Your basic American has very little quality of life, everything is work work work, stress stress stress, and then you die. It's lousy and it isn't about work ethic anymore, it's about calling workaholism normal and admirable.


: It's about (5.00 / 1) (#48)
by cal1942 on Sat Mar 28, 2009 at 06:04:06 PM EST

maximizing profit to the point of dumping all the risk on the backs of the average person who does not have full control over his own destiny, who's subject to the whims of a small clique.
In the 90s I heard an exec from Ford say that their workers should remain on edge at all times about their jobs. Easy to say for people who make enough in one year to guarantee a lifetime of comfort.
It comes down to the worker sacrificing a reasonable dignified life for the sake of earning massive amounts of money for the people at the top, where a very short career can grant a liftime of luxury.
That's the mortal sin of unrestrained capitalism.

I jus read this too (5.00 / 6) (#4)
by Militarytracy on Sat Mar 28, 2009 at 10:03:12 AM EST

Where Matt Taibbi calls B.S. on the DeSantis claims of innocence.

: Excellent Taibbi post. n/t (5.00 / 1) (#12)
by ChiTownDenny on Sat Mar 28, 2009 at 10:46:27 AM EST

: Yes, Taibbi (5.00 / 1) (#21)
by KeysDan on Sat Mar 28, 2009 at 12:15:32 PM EST

nails it. DeSantis did not know what his boss, Joe Cassano, was up to. The same defense claimed by the piano player at the Everleigh sister's Club in Chicago: he did not know what was going on up stairs, he was just paid to tickle the ivories.

: Best Righteous Indignation... (none / 0) (#36)
by santarita on Sat Mar 28, 2009 at 01:13:27 PM EST

rant that I've seen.

There is an utter disconnect... (5.00 / 3) (#5)
by Romberry on Sat Mar 28, 2009 at 10:04:13 AM EST

...between the reality faced by the masses and the "reality" that the denizens of Wall Stree/high finance think they live in. There is an arrogance and a sense of entitlement among these "best and brightest Masters of the Universe" which is nothing short of vulgar.

Regardless of what has happened and regardless of the fact that we mere proles are left holding the bag paying for their mess, they deserve their millions. They really do. Just ask em.

As only Taibbi can say it :) (5.00 / 4) (#7)
by Militarytracy on Sat Mar 28, 2009 at 10:11:19 AM EST

Hey Jake, it's not like you were curing cancer. You were a f*ck!ng commodities trader. Thanks to a completely insane, horribly skewed set of societal values that puts a premium on greed and severely undervalues selflessness, communal spirit and intellectualism -- values that make millionaires out of people like you and leave teachers and nurses, the people who raise your kids and clean your parents' bedpans, comparatively penniless -- you made a lot of money.

: wow, great quote... (5.00 / 1) (#16)
by of1000Kings on Sat Mar 28, 2009 at 11:52:14 AM EST

couldn't have said it better myself...
the magic money-changers have become the aristocracy of our society...not entrepreneurs who actually provide a service...or intellectuals who can promote greatness (America no longer promotes greatness, just populism--which seems like the wrong way to go about evolving a society into a better society)...
we in America bow down to those that work in the financial industry...I'm guessing that Madhoff was a truly respected and revered man in our country....he was one of the best and the brightest, living in the Utopia that is his mansion-flat in NY with the rest of America's Aristocracy...going to fundraisers all the time in a black bow-tie....what a great man he was...
The problem is that in America we've gone from valuing human life based upon the type of person to valuing life based solely upon the person's checkbook...
Your success as a human being is no longer tied to your work ethic, integrity and compassion; whether you are a successful human being now relies entirely on your checkbook, and whether you get invited to the best black-tie fundraisers...
the periodical Cabinet did a pretty good editorial on this a few years ago and I'll see if I can't find the vol/issue or even a link...
I consider myself one of the best and the brightest (possessing all the educational and test accolades that we use to assess this)...I consider myself even brighter because I decided to forego a meaningless career in securities (which is what I thought I wanted to do as a younger man, based mostly on my aptitude for the industry and the googles of money that one can make--and thus the immense respect that one receives from his/her peers) for something more passionate and relevant to culture...

Chutzpah! What brass! (5.00 / 2) (#10)
by oldpro on Sat Mar 28, 2009 at 10:39:57 AM EST

Whining from a man who, even without the bonus, can afford to quit his job in this economy...and in a huff!

Probably seemed like a good idea at the time...

: oldpro (none / 0) (#49)
by cal1942 on Sat Mar 28, 2009 at 06:38:09 PM EST

great comment. That little piece of the story tells volumes.

Restructuring entitlements (5.00 / 6) (#13)
by Munibond on Sat Mar 28, 2009 at 11:12:50 AM EST

It really troubles me that retirement and health benefits for retirees are being targeted for deficit reduction, after trillions go to DeSantis and his ilk.

I'd love (5.00 / 2) (#15)
by Warren Terrer on Sat Mar 28, 2009 at 11:41:36 AM EST

to get screwed the way DeSantis did. I could sure use the $750k.

Again (5.00 / 1) (#24)
by Warren Terrer on Sat Mar 28, 2009 at 12:31:58 PM EST

absurd. DeSantis is only in his 40s. The Delphi retirees are retired. DeSantis earned millions.

The reason I didn't respond to your points is because your position is patently absurd.

See earlier comments (5.00 / 1) (#28)
by Cream City on Sat Mar 28, 2009 at 12:38:07 PM EST

by lodi about Wall Street and then see below.

Leeeeaaaave lodi alone. A commenter can't be faulted for not keeping up but commenting, anyway.


: How many names (none / 0) (#33)
by Steve M on Sat Mar 28, 2009 at 01:06:35 PM EST

can one person manage to comment under, I wonder?

Your opinion (5.00 / 1) (#30)
by Warren Terrer on Sat Mar 28, 2009 at 12:43:40 PM EST

that DeSantis got screwed is absurd. You are entitled to have an absurd opinion. Why you would want to have an absurd opinion I do not know. But you are entitled to it. Have a nice day.

Anybody feel like (5.00 / 1) (#31)
by TeresaInSnow2 on Sat Mar 28, 2009 at 12:53:02 PM EST

negotiating a compensation package including retirement benefits now?

Muust. Paaay. Deferred. Executive. Booonuses.

But you little people? Go to h*ll.

Belly up (none / 0) (#3)
by Jeralyn on Sat Mar 28, 2009 at 10:02:27 AM EST

I misread your title as "What happens when your company Goes Up in Smoke" -- think I have Cheech and Chong on the brain?

: Heh (none / 0) (#6)
by Big Tent Democrat on Sat Mar 28, 2009 at 10:04:23 AM EST

Would've made for a better title.

His salary was $1 (none / 0) (#17)
by Cream City on Sat Mar 28, 2009 at 11:56:18 AM EST

he said, so how would he have been better off? I think you haven't grasped the full story here. . . .

Ergo (none / 0) (#19)
by Warren Terrer on Sat Mar 28, 2009 at 12:00:49 PM EST

Your claim that DeSantis got screwed is absurd.

See first link (none / 0) (#23)
by Cream City on Sat Mar 28, 2009 at 12:29:31 PM EST

above.

And you'll also see the complexity of the contractual point. It's not that simple.

: When did he start actually working for a dollar? (none / 0) (#26)
by nycstray on Sat Mar 28, 2009 at 12:35:36 PM EST

and was his "bonus" just covering that period? Also, weren't there payouts prior to this latest round (Dec?)?

His compensation (none / 0) (#25)
by Munibond on Sat Mar 28, 2009 at 12:33:14 PM EST

like that of other made men on Wall Street was derived from a dishonest system (insider trading, collusion, cronyism) in which there was no downside because his employer was too big to fail or to be prosecuted.

In this country, we have clearly chosen... (none / 0) (#27)
by Dadler on Sat Mar 28, 2009 at 12:37:15 PM EST

...that whatever business "needs" it can have, even if that means cancelling contractual obligations to employees and elderly retired folks. And you wonder why many people made wild purchases and ran up debt. On some level, as stories like these show, people learned to simply, and rightfully, not trust that they had a pension or a financial future through their supposed employer. Animals don't treat each other with such unnecessary and overly calculated malice. Animals just need to eat. Too many businesses need to eat people literally and metaphorically, need a good amount of suffering to wring "enough" profit.

Sick.

Ah. "Details" (none / 0) (#34)
by Cream City on Sat Mar 28, 2009 at 01:08:14 PM EST

aka facts. But opine on them, anyway.

DeSantis (none / 0) (#37)
by squeaky on Sat Mar 28, 2009 at 01:17:29 PM EST

Is a company man and paid well for his position, wonder what it comes to per/word?

Ah, so you are a regular reader (none / 0) (#38)
by Cream City on Sat Mar 28, 2009 at 01:18:31 PM EST

here, not just in the last few days. Thought so.

Your "more educated" argument mystifies (none / 0) (#39)
by esmense on Sat Mar 28, 2009 at 01:36:28 PM EST

me. I can't for the life of me see why the sanctity of contracts should be determined by the education level of employees. But, that absurdity aside, I don't understand why you think Delphi's salaried work force is likely to be uneducated? Certainly among the salaried staff of a manufacturer of such technical products there are very many engineers, designers, IT, marketing and financial professionals, in addition to highly skilled technicians and craftsmen. All of these people invested their time, their education, their skills and their years of experience in the company with the expectation of some specified return. Idiots like DeSantis aren't the only people who take risks in a capitalist economy -- everyone does. It's absurd to suggest that some people "deserve" to be protected from the consequences of that risk but others do not.

Lodi is banned from my threads (none / 0) (#41)
by Big Tent Democrat on Sat Mar 28, 2009 at 02:37:59 PM EST

Do not respond to his comments please.

I am deleting all of his comments.

: this thread is very confusing with all the (none / 0) (#50)
by DFLer on Sat Mar 28, 2009 at 08:05:50 PM EST

deletions. I don't know what people are responding to. Are they replying to a deleted comment, or what?
Jeralyn deletes the obnoxious comments AND the responses to them as well.
just saying...

Stuck in Lodi again, I guess

All DeSantis did was (none / 0) (#42)
by pluege on Sat Mar 28, 2009 at 02:38:09 PM EST

highlight what sanctimonious, self-absorbed, arrogant skanks the wealthy are. The country would be much much better off if they all got pissed off and left.

DeSantis says he (none / 0) (#43)
by ding7777 on Sat Mar 28, 2009 at 02:52:21 PM EST

"never received any pay resulting from the credit default swaps that are now losing so much money"

Parsing this, I would like to know:

#1 if DeSantis differentiates between "pay" and "bonus"

and

#2 did DeSantis ever receive "bonus" money from the premiums of CDS's now losing so much money (since year 2000)

#3 did DeSantis ever receive "pay" or "bonus" from CDS's that did not lose money?

You relax and move on (none / 0) (#44)
by SOS on Sat Mar 28, 2009 at 03:14:53 PM EST

no less for the wear and tear.
http://donpetrash.com/img/crazy_paul.jpg

Bonuses Out Pay Raise In (none / 0) (#45)
by squeaky on Sat Mar 28, 2009 at 03:15:16 PM EST

Base pay up 70%. BofA strategy to keep the natives from getting restless.

Bank of America, which has received $45 billion of taxpayers' money, may raise the annual base pay for some managing directors to about $300,000 from $180,000, said the people, who declined to be identified because the final numbers are still under discussion. Salaries for less-senior directors would climb to about $250,000 from $150,000, and vice presidents would get $200,000, up from about $125,000, the people said.

link via Moon of Alabama

DeSantis and the other executives (none / 0) (#47)
by inclusiveheart on Sat Mar 28, 2009 at 04:35:36 PM EST

announced that they were all taking $1 salaries - the company did a wonderful PR blitz promoting these folks as honorable - willing to sacrifice etc. - then it basically comes out that they were taking $1 with the expectation that they'd get in DeSantis' case over $700,000 of those thingies we call dollars. Now what did he do wrong personally? I don't have access to that information, but he did engage in what I would call a deception along with the other executives with that PR stunt.

He also sort of comes off as a bit of a fool if he would agree to such a deal if he cared that much about being compensated for his work. He should have refused the $1 salary deal if he wanted to get paid - especially when the company offering the deal was in so much financial trouble. Not a wizard financial deal-maker imo.

Anyhow, on a certain level it really is difficult to sympathize with his position.

Back to basics 101 (none / 0) (#51)
by NYShooter on Sun Mar 29, 2009 at 12:43:41 AM EST

Any project begins with a vision. If the vision is deemed desirable, then you go back and construct the model, from the first nuts and bolts, to the finished product.
So, it would seem to me that the first question we should be asking ourselves is, "is Capitalism the model we want driving our economic engine?"

At the same time we have to answer the second question: "what kind of a country do we want America to be?"

Until a majority of the population decides on the answer to those two questions, everything else going on is just tinkering with the disparate parts of our system, and our society.

In answering those two questions, we are blessed in having two perfect, recent examples, of the two polar opposite points of view:

Reagan/Bush: "Survival of the fittest; the h*ll with everybody else;" "health Care" is an emergency room, and "ketchup is a vegetable."

Bill Clinton: "A rising tide lifts all boats," and "no economic expansion can be deemed a success unless the lowest among us enjoy a proportional rise in their standard of living."
So what's the problem? One worked, the other didn't.

The problem is, it seems to me, Obama wants to straddle the two.

That's why Paul Krugman is on the cover of Newsweek; to remind us that Obama refuses to take a stand in doing the right thing, but instead, condemns us to following his whimsical and nonsensical campaign slogan of "non-partisanship," leading to a decade, or more, of decreasing standards of living for most Americans.

Note: "partisanship" meaning in the broader sense of agenda, not necessarily political party.

delphi v desantis (none / 0) (#52)
by Jlvngstn on Sun Mar 29, 2009 at 07:34:55 AM EST

so thousands of employees will lose health benefits, thousands will lose jobs mostly because the economy has stalled due to a credit crisis caused by credit defauilt swaps and a small amount of bad mortgages.

One of the originators or creators of the crisis who knew working for one dollar was a RISK, is unhappy that his RISK did not pay off.

Need we say more on his ability to calculate risk?

It is like selling a nuclear weapon to someone and then asking for leniency because you had no idea they would actually use it.