Plan of Reorganization?

[leadleader]

I noticed the lot on ebay of Tucker documents, and it included one declared as Plan of Reorganization 1949. What was the purpose of this document? I have attached the link in case you care to look.


http://cgi.ebay.com/Tucker-Automobile-S ... dZViewItem

[Larry Clark]

The Tucker Corporation faced a number of lawsuits over the short few years it was in business. The first shareholder derivative suit was filed against the corporation on 6/30/48 (a derivative suit is brought by a shareholder(s) on behalf of the company to ask the court to allow them to recover assets believed properly owned by the corporation). Before that, among others, was Abe Karsten's suit (yes, the Abe in the movie). The first suit to seek a receivership (involuntary bankrkuptcy) was filed on 7/14/48. There were two different bankruptcy petitions that ultimately were consolidated on 12/15/48. A plan for reorganization is what creditors and/or shareholders bring forward to allow the company to settle legal claims (the company paying some portion of owed debt) and emerging from bankruptcy. Delta Airlines is about to emerge from Chapter 7 bankruptcy as a result of a plan for reorganization (as have other airlines). Unfortunately for Tucker, things were beyond recovery by the time the time the plan of reorganization was filed for the same reason that Preston Tucker had failed: $$$$$$$$. Larry

[leadleader]

So, if I understand correctly, this document served as an instrument for the company to resume its activities following the conclusion of bankruptcy proceedings. In this case, although the company filed such a petition, the true reorganization had become a moot point. I am assuming that this document though, or one like it enabled the company to stay alive in name as the owner of franklin air-cooled.

[Larry Clark]

You have accurately captured the essence of what happened. Air-Cooled remained profitable but not sufficiently profitable to re-launch an attempt to build a new automobile. The bankruptcy proceedings dragged on for many years- it was once thought there might at least be more funds to pay back creditors more on the dollar and perhaps even shareholders. This did not happen. Ultimately the only ones who appear to have made money were the ones associated with processing the bankruptcy case- the trustee, lawyers, etc. What is forgotten many years after the fact is that many small dealers lost everything they had invested and then faced legal proceedings to where the trustee sought a court order to make them pay their remaining installments owed for a company that was not going to ever build a car. This is why a good number of would-be dealers became very bitter about their Tucker experience. For them, it was an experience to forget. Fortunately, the combination of TACA and the movie helped some re-capture why they had gotten excited about the possibility of the Tucker car and brought more pleasant closure to all of this much later in life. Larry