Standard General, RSHCQ and other train wrecks
I was starting to wonder about that also. It seems that everything Standard General is involved in turns into a train wreck for itself within a matter of months. Standard General managed the whole RSHCQ situation so bad that they have managed to almost completely wipe out the unsecured liabilities and run the risk of even cutting into the secured debt that they own at some point.
The whole idea of limiting RSHCQ to being able to close only 200 stores per year made no sense to me. The reason given is that Standard General wanted to ensure there was enough inventory to cover their loans, but the inventory could have been stored in a warehouse and all of the stores that were losing money, closed, and RSHCQ would be a lot better off. Instead, Standard General demanded the money losing stores stay open, making the financial situation much worse.
It is as though someone is deliberately arranging it that way, like someone within the company is doing 'stupid deals' for some reason (self sabotage?, some kind of personal problems interfering with decision making process?, some kind of power struggle within Standard General so that a faction within Standard General is using problems with deals like RSHCQ to gain over another faction?, or something else that we have no way of telling from the outside) , to make it so Standard General could lose a lot of money. It is possible that maybe it is just a 'bad run of luck', but the kind of people that Standard General is supposed to be hiring are supposed to be people who have the 'golden touch', they always make money no matter what; instead they seem to have people that have the 'lead touch', everything they touch turns to lead.
Normally, a company like Standard General should be almost assured of making money in deals like this, even if the company goes bust, by making sure that there is such a wide margin of safety on their parts of the financing, that they would still come out whole, plus a profit. Instead, Standard General looks like its partnership could be at risk, since even if they still come out whole, and with a profit, who would want to stay in such a fund that seems to always be in the middle of a mess and at risk to lose their money?
Louis J. Desy Jr.
