Archive for January 2nd, 2009

Funding Crisis Follows Cerberus

January 2, 2009

Chrysler LLC received its $4 billion low-interest federal government loan Friday to help the auto company continue funding its operations and pay its suppliers for parts.

Those in the powersports industry will recall Chrysler’s owner, Cerberus Capital Management LP, went through a similar problem – paying off suppliers for parts – when it owned Global Motorsports Group, Inc., the parent company of PG&A distributors Motorcycle Stuff and Custom Chrome.

Global Motorsports Group, Inc. was acquired by Cerberus Capital Management in 2005.

Following the takeover, Cerberus executives placed tight controls on Global’s operations, putting decision-making authority into the hands of its on-site representatives. According to some observers, those non-powersports managers subsequently made some mistakes in dealing with vendors and dealers because they didn’t understand the industry.

Three years later, on Jan. 31, 2008, Global filed a Chapter 11 bankruptcy petition for reorganization just a few days after the company was sold to Dae-Li USA Inc. for $16 million plus assumption of a long list of liabilities to more than 350 unsecured suppliers.

Cerberus’ website states, “We succeed when our companies succeed, to the benefit of our portfolio companies’ employees, customers, suppliers and the communities in which they operate.

“Cerberus believes that strong corporate governance is the cornerstone of our business.”

Motorcycle Stuff closed its doors in 2008, after 37 of business. How long, do you think, Chrysler will survive?

Motion Filed to Consolidate Yamaha Rhino Suits

January 2, 2009

A motion has been filed with the U.S. Judicial Panel on Multidistrict Litigation to consolidate and centralize product liability lawsuits related to the Yamaha Rhino. Although Yamaha has not confirmed how many cases have been filed by injured riders, estimates suggest that more than 200 lawsuits against the Rhino are currently pending in various state courts and federal courts throughout the country.

Several plaintiffs who have pending cases are requesting that 57 Rhino ATV lawsuits be transferred from

Yamaha markets five Rhino models for 2009. The units sell for a suggested retail price of between $8,499 and $12,399.

Yamaha markets five Rhino models for 2009. The units sell for a suggested retail price of between $8,499 and $12,399.

33 different U.S. District Courts to one court where they will be coordinated as part of an MDL, or Multidistrict Litigation. An MDL is a federal procedure that allows multiple cases with common underlying facts to be consolidated for pretrial litigation. An MDL is often granted in cases where it will help avoid duplicative discovery, eliminate inconsistent rulings, conserve the resources of the parties and the court, and serve the convenience of the parties and witnesses.

The Yamaha Rhino was first introduced in 2003. The product liability lawsuits all allege that design defects in the side-by-side ATV caused the vehicle to rollover, resulting in serious and debilitating injuries for riders. The lawsuits allege that the Rhino was negligently designed with a narrow wheelbase, high center of gravity, small turning radius and powerful engine, which combine to make the vehicle inherently unstable.

In September 2006, Yamaha sent a letter to owners acknowledging the risk of rollovers. In the letter, they outlined that riders should be careful to keep their arms and legs inside the vehicle during a rollover. The OEM began offering doors and additional passenger handlebars in 2007.

The Judicial Panel on Multidistrict Litigation will consider the Motion filed by some of the plaintiffs to form a Yamaha Rhino ATV Products Liability MDL at a hearing scheduled for January 29 at the U.S. Courthouse and Federal Building in Fort Myers, Fla.

Baltimore-based Saiontz, Kirk & Miles, P.A.
 is among the many law firms pursuing litigation. Saiontz, Kirk & Miles, P.A has more information pertaining to the Yamaha Rhino suits at its website,