Dumped on by Diving Companies Again

[Xanthro]

When one company buys another, they do not automatically inherit the purchased company's liabilities. The purchaser has no legal responsibility to honor any of the purchased company's warrantees, pay off any of their obligations, etc.

If a company purchases another company then liability transfers as well. I'm not sure where you are getting this legal advice.

All dept and liability are assumed by the new parent company.

If a company sells assets, then this isn't true, but that is wholly different.

If Dacor sold then rights to say a fin design, then Mares wouldn't have liabilty for Dacor's fins of the same design.

Dacor was purchased as a whole, not an asset sale.

This is actually silly if you think about it. I have a number of companies, why don't I run up massive dept on one, sell it for a penny to another one of my companies, in order to not pay the dept? Reason is, I CAN'T. My new company would still own the dept. If I liquidated my first company, then the liquidation sale would have to account for liabilites such as dept.

Bankruptucy can also affect this. If Dacor was transferred via a banckruptcy procedure, then it is possible Mares wouldn't assume dept, because Mares techincally didn't by Dacor, it was transferred ownership by the court, with specific legal and financial obligations spelled out by the court.

Xanthro

 

[WJL]

Xanthro, you are whistling through the Valley of Doom here. Life is not as simple or fair as you might think.

Dacor was purchased as a whole, not an asset sale.

I don't know how you might know this, so it's possible that you're correct. But I doubt it. In the normal course of events, when buying out a competitor, the purchaser acquires just the assets and leaves the debts to the seller. The fact remains that Mares is not honoring warranties on Dacor products. This strongly suggests to me that Mares purchased Dacor's assets and not its liabilities.

This is actually silly if you think about it. I have a number of companies, why don't I run up massive dept on one, sell it for a penny to another one of my companies, in order to not pay the dept? Reason is, I CAN'T. My new company would still own the dept.

Well, actually, you can. It's done all the time. The new company would not acquire the debt unless the debt was secured by the transferred assets. If the debt is unsecured then you can transfer the assets free of any debt. The only real constraint is that you have to sell the assets for a commercially reasonable price, but that is subject to so many uncertainties that you could get away with almost any price at all more than a penny. This is why lenders demand security interests in assets, and guarantees by the company owners, and audited financial statements from borrowers, just to avoid such monkey business.

If I liquidated my first company, then the liquidation sale would have to account for liabilites such as dept.

Once again this depends mostly on whether the debt is secured or not. There are plenty of ways to finagle the payment of unsecured debts in liquidations, such as by first paying off "loans" from shareholders or paying accrued back compensation to officers or or paying off unrecorded security interests for insiders.

This has all been interesting speculation, but in the end, if you have a Dacor reg, nobody is going to honor your "lifetime" warranty. You'll just have to get over it.

 

[garyfotodiver]

Thank you Bill, I couldn't have said it any better.

 

[Xanthro]

I'll admit, you can shell assets, it doesn't make you immune to the liablities. Those who own, even unsecured, liabilities can sue.

Mares is likely legally liable for the warranties, but made a finincial decision that any lawsuits arizing out of the action would be less than honoring their obligation. Companies do this all the time.

I had to deal with this very issue in regards to the textile industry in the 1980s. I worked for a firm that represented a cloth company. It wasn't uncommon for a textile company to buy product, not pay, close their doors, open up a firm with the same owners, sometimes even in the same shop, and claim they weren't liable for the payments. Sometimes they simply sold their interest to their relatives, who sold them back. They ALWAYS lost in court. They still likely made out ahead, since most didn't bother to sue.

You can try to only transfer assets, but it doesn't shield you. I've been involved in some of the bigger mergers in the United States, and especially California. It would be great if you could only transfer assets and be immune to suit, but you can't.

Problem for Dacor owners, is they likely have little power and ability to sue. BTW, I don't own one of their regs.

I'll also grant, that no local LDS is going to be honoring those warranties.

Xanthro

 

[WJL]

Our positions are converging! It's internet Nirvana!

I'll admit, you can shell assets, it doesn't make you immune to the liablities. Those who own, even unsecured, liabilities can sue.

But of course. Like the Spanish Inquisition, no one (except governmental agencies in certain circumstances) is immune from getting sued. What gets the punters involved is predicting the outcome - who will win and will the winner net enough money to make the whole thing worthwhile?

Mares is likely legally liable for the warranties, but made a finincial decision that any lawsuits arizing out of the action would be less than honoring their obligation. Companies do this all the time.

Mares may or may not be liable for Dacor warranty claims, but I agree that Mares approached the situation from a pure bottom-line analysis of potential gains and losses. If Mares was well-counselled in this transaction, and I'm sure it was, it made some provision in the deal to handle this - most likely it required that Dacor hold some of the purchase money in escrow to pay contingent liabilities, of which warranty claims would be an element.

I had to deal with this very issue in regards to the textile industry in the 1980s. I worked for a firm that represented a cloth company. It wasn't uncommon for a textile company to buy product, not pay, close their doors, open up a firm with the same owners, sometimes even in the same shop, and claim they weren't liable for the payments. Sometimes they simply sold their interest to their relatives, who sold them back. They ALWAYS lost in court. They still likely made out ahead, since most didn't bother to sue.

You're right that unsecured creditors can try to chase the assets, but it's not easy. The cheaters don't ALWAYS lose. If they are not too incredibly greedy, they can set things up to skate away without much worry. As you saw, the PITA factor in this type of suits is very high, and unless your claim is very large, and the cheaters are very brazen, it is usually not worth the expense of the lawsuit to try to fight it.

Problem for Dacor owners, is they likely have little power and ability to sue. BTW, I don't own one of their regs.

I'll also grant, that no local LDS is going to be honoring those warranties.

Xanthro

This is all making me start to think that somebody may in fact launch a class action over this. But the Dacor owners should be aware that the primary result of such a suit, even if it succeeds, will be a nice fee for the attorneys, and some small payment or benefit to the individual class members. After all, what was the original warranty worth in dollar terms? On the outside, maybe a hundred bucks? That's what the individual damage claims would be. A settlement would be for some fraction of the maximum exposure to the defendants.

So life just continues to be unfair, as it always has been.

 

[pt40fathoms]

Twin hose regs, ScubaPro still providing parts for old products, and the legal responsibilities of Mares/Dacor.


Sheesh where too start?

First off, Mares is an Italian company, and all of the arguments many of you have made with regards to class action law suits don't amount to a hill of beans. Sorry to burst your bubble, but the lawyers and courts in America do not have ANY power in any other country other than what that country is willing to afford them, period, end of story!

Twin hose regs, well, I've used one, but I've also used a Zilog Z80 computer that I built long ago. Both belong in the trash bin, but of course that is only *my* opinion. You are free to disagree and go dumpster diving for that old Z80 and the twin hose regs to your hearts content.

Finally about SP providing such great-unparalleled service and parts for all the "older" models. HAH, what bull! Just try and get parts for a SP Pilot from ScubaPro. One of the nicest regs of its time, and still a good performer, but dead in the water once it fails.

Now that I've had my rant for the day, I feel much better. Ahhh SB is cheaper than therapy and twice as effective.

 

[yknot]

This is all making me start to think that somebody may in fact launch a class action over this. But the Dacor owners should be aware that the primary result of such a suit, even if it succeeds, will be a nice fee for the attorneys, and some small payment or benefit to the individual class members. After all, what was the original warranty worth in dollar terms? On the outside, maybe a hundred bucks? That's what the individual damage claims would be. A settlement would be for some fraction of the maximum exposure to the defendants.

Most likely reward would be a certificate entitling the original Dacor owner to $100 off the retail purchase price of a Mares regulator of their choice, redeemable at an authorized reseller.

I would disagree with the statement that Mares was well advised in the Dacor purchase. In the end, what did they get? The brand seems to have all of the appeal of a used Yugo, at least amongst the majority on this board.

Question to pt40fathoms: per you sig line, wouldn't a good scuba instructor impart a knowledge of depth?

 

[alemaozinho]

As most of you have heard DACOR is not longer supporting their Pacer line of equipment. Mares did the same thing by not supporting equipment made by one of their past names (VOIT, SWIMASTER). AQUALUNG no longer makes parts for doublehose and has also announce they will stop supporting some of their early singlehose designs. Now a lot of this stuff was made with "lifetime warrenties" which I took to mean that parts will still be made available to fix the stuff. John Davidson was a diver and ran his company that way. There are 1/4 million regurators out there that people are still using that don't need to be replaced. Too bad the new owners don't see that. SCUBAPRO still has a policy to fix, repair or supply parts to any original owner of any SCUBAPRO regulator. I have already heard that some divers are not buying DACOR/MARES because if they won't support their stuff made just a few years ago then why should we trust them in the future. Buy that $500 regulator now and in 10 years will you be able to fine parts.

Buy a Poseidon and your worries are gone...Peace

 

[WJL]

First off, Mares is an Italian company, and all of the arguments many of you have made with regards to class action law suits don't amount to a hill of beans. Sorry to burst your bubble, but the lawyers and courts in America do not have ANY power in any other country other than what that country is willing to afford them, period, end of story!

Ahem. This novel proposition would be a surprise to all those foreign companies who have been forced to litigate claims against them in U.S. courts. If a foreign company carries on regular and systematic business in the U.S., it can be sued in the U.S. The resulting judgment can be enforced against the defendant's U.S. assets. Moving abroad, there are treaties which regulate the procedures for getting U.S. judgments enforced in foreign countries. It is sometimes complicated and expensive, but it can be done.

 

[michaelp68]

Ahem. This novel proposition would be a surprise to all those foreign companies who have been forced to litigate claims against them in U.S. courts. If a foreign company carries on regular and systematic business in the U.S., it can be sued in the U.S. The resulting judgment can be enforced against the defendant's U.S. assets. Moving abroad, there are treaties which regulate the procedures for getting U.S. judgments enforced in foreign countries. It is sometimes complicated and expensive, but it can be done.

I was about to say the same thing about that novel proposition.

Michael