Corporate Undertaker

We were in the fifth month of this planned six-month bankruptcy. The principal OEM had financed a significant portion of the bankruptcy as the DIP (Debtor in Possession) lender. My client’s company was not unionized; most of the employees were single moms earning between $12 and 14 per hour. There were three locations with more than 1,500 employees. At the end of the bankruptcy, it was unclear how many would have jobs. The intent was that the assets would be sold to another supplier, but it was unclear whether they would absorb all of the employees.

At the beginning of the bankruptcy, the OEM agreed to pay for all of the worker’s compensation claims and health insurance claims. The company plans were self-funded. When an employee gets injured it takes weeks, sometimes months, for the claims to be processed. This meant that after the bankruptcy and sale of assets were completed, there would be trailing liabilities. These would have to be funded or else the healthcare providers (doctors, therapists, hospitals, etc.) would go after the employee for the money, even if the company no longer existed.

Five months had passed, and the OEM kept kicking this issue down the road. As CRO, I kept asking them to put this dollar amount in the budget to be approved by the bankruptcy judge, and each time they said they would do it later. This amount was approximately $1.5M. We were a month out from the closing of the sale and I now knew they had no intention of paying. They were tough and unrepentant. They would burn the employees and they figured the scorched earth would figure itself out. I wasn’t okay with this. I figured we needed to resolve this matter quickly. Talking was getting nowhere; I had had enough of inaction. For months, despite holding the title of CRO, I felt like I had little control over anything. But there still were a few things that were within my reach. I needed to wake everyone up and get their attention.

At each plant, the OEM had half a dozen engineers monitoring all production. When a supplier is in trouble they no longer trust their representations, so they demand that their own people are present at these factories. They are the eyes and ears, ensuring that things are running smoothly. So, I decided to make the OEM blind and deaf. I called the plants and had my team escort these engineers to the door. I threw 18 of them to the curb at 3:30 p.m. That got their attention. It took 20 minutes for the OEM’s lawyer in Detroit to call me.

“Did you throw all of my client’s engineers out of your plant?” he asked.

“Yes.”

“Why would you do that? It’s illegal. We have an agreement. We will get an injunction.”

I shot back, “That’s a good idea. You should go to court. We should all go to court. I want to explain to the judge how you are cheating 1,500 employees out of their healthcare insurance and worker’s compensation claims.”

“We said that we’d pay those claims. We’re going to pay them.”

“Great. Pay them today.”

“This is not the way to negotiate.”

I replied, “It’s not a negotiation,” and hung up on him before he could respond.

Ten minutes later, my lawyer phoned me, and I hung up on him. Ten minutes after that, the bank’s lawyer phoned me, and I hung up on him too. I then called my team at each plant. I told them to buy a disposable camera and go to the bar where these engineers were hanging out. Our plants were in small towns; I knew it would not be difficult to find them and I knew for certain they were drinking and probably laughing at my certain demise. I then instructed my team to take pictures of each one of them. Not in secret. I told them to walk up to them and snap a picture. Most posed and smiled.

Twenty minutes later, Detroit was on the phone again. This time there were three lawyers on the call. More muscle. The most senior lawyer began the conversation in a confused and almost hushed tone:

“Domenic, did you take pictures of all of my client’s engineers?”

“Yes,” I replied. “And I have pictures of you and your legal team too.”

“Why? Why would you do that?” he questioned.

“I’m going to put all of the pictures on the company bulletin boards.”

John’s voice tightened. “What exactly are you trying to do?”

“Well, in a couple of hours, all of the employees are going to find out that they’re not going to have health insurance or worker’s compensation. They’re going to be really mad. They’re going to want to kill people. I just want to make sure they kill the right people.” I hung up the phone.

They phoned back 10 minutes later. They had a woman attorney start the conversation this time.

“Domenic, we already agreed to pay this amount so why are you doing this?”

“Jane,” I replied. “I think you and your client are deceitful and have no intention of paying.”

“Domenic, we can meet tomorrow and make the appropriate plans.”

“Sorry, too late. I need the money today. If I don’t have it today, I am shutting the plants down at midnight. If I don’t have adequate insurance, I cannot in good conscience let people into the plants knowing that they might get hurt and there’s no money to pay for their healthcare.”

There was a long, silent pause. Then Jane responded.

“My client can’t do that.”

I hung up.

Jane called back immediately, yelling into the speaker phone.

“You are holding a gun to my client’s head. This is no way to negotiate.”

I burst out laughing. “Hey, I didn’t ask to be Jimmy Hoffa. I’m not trying to form a union here. You made a deal—just honor the deal. Your client got parts for their cars. Pay your bills. These people worked in earnest for you and now you want to cheat them. This isn’t a gun. A gun is a single mom showing up at an emergency room with her kid on a Saturday night thinking she has insurance. Then two months later when she’s unemployed, she gets a bill for $1,500—THAT is a gun. Pay your bills or you don’t get your parts.”

I hung up.

Thirty minutes later $1.5M was wired into our account.

I didn’t feel great about this. I didn’t smile and high-five anyone. I just shook my head and thought, “How stupid.” I knew how to street fight. I knew how to survive. I also knew how to protect people. I just thought that in a company this big and this important, that people would be straightforward and honorable, but they weren’t.