California Autos Examiner

Tuesday, July 29, 2008

Mervyns and the Chrysler 300C

7/29/08 Update: And so it is done. In a nice move, Mervyns has asked for the Bankruptcy Court permission to continue to honor its current customer policies regarding merchandise returns and outstanding gift cards and customer loyalty programs. Not all retailers have done this.

7/29/08 Update: The WSJ is reporting that Mervyns is near death with department-store chain filing for bankruptcy protection in the next few days unless a knight in shining armor can be found. However, unlike previous reports it appears that Cerberus was able to get away clean by selling its stake to its partners for a profit back in 2007. In fact none of the investors in this deal have apparently been hit too hard because the Mervyns deal was setup as two transactions: one for the retailer and one for the retailer's real estate. Pretty sneaky stuff! Can Mr. Feinberg & Company pull a similar profitable rabbit out the hat of despair with GMAC and Chrysler? Also, where will I buy my Haggar slacks now?

update source: wsj

Original 7/20/08 Post:

Mervyn's Fights to Keep Its Store Doors Open -

So, you've fallen for the headline. Now, you're asking me why I've brought up the troubled California retailer. Well, here at ACATT world headquarters, Mervyn's isn't just a provider of fashion, it's also partly owned by Cerberus Capital Management the same folks who own most of Chrysler a just a touch over half of GMAC. It's a good thing that Cerberus has three heads, all the better too keep track of its troubled investments. CCM primarily invests in companies near bankruptcy in hopes to make them profitable once again, so undoubtedly they are going to break a few eggs while making a profitable omelet. However, it would seem that as of late Mr. Feinberg is having more trouble putting Humpty Dumpty back together again. Does Mervyn's really have anything to do with Chrysler? No, but it does give you a sense of the current economic meltdown.

I should also add that Mervyn's is not yet bankrupt and could still reverse its fortunes. However, when your vendors have halted shipments and key lenders have pulled your financing, well you can do the math.

If you happen to be holding any Mervyn's gift cards, I'd spend them now. As Sharper Image buyers found out, those little cards can become worthless once a company has declared bankruptcy.

photo source: william blake artwork via wikipedia

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