As noted in past entries — when companies face financial difficulty, distressed asset opportunities are often ripe for the taking. Just ask Wilbur L. Ross Jr., the man who helped restructure the bankrupt steel industry and earned a tremendous return. Is now the time to let industries like the Big Three automakers slide into bankruptcy? In this article from The New York Times, Ross does not go that far. The two industries — steel and automaking — are like apples and oranges. Ross favors some form of government intervention, to reduce catastrophic ripples that might destroy suppliers and dealers connected with the auto industry.
“Bankruptcy [for the auto industry] will be a total mess, and may not produce anything of value at the end of it,” Mr. Ross said.
Still, in listening to a man like Ross, who made bets on Indian airlines in July — foreseeing the end of the oil bubble — one gains insight into a perspective shared by many specialists in distressed assets, namely that one company’s misfortune is another investor’s opportunity.
With a government rescue plan for the Big Three, if the government cannot ‘crack enough heads’ in order to straighten out the failing automakers, they would have no choice: “The government would have to have the fortitude to say, ‘We’re not going to keep pumping in money,’ and mean it,” says Mr. Ross.
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