Question

Read and review this case scenario below and answer:

From the obvious idea of getting more insurance, how could Lucci have managed risks better? Be sure to address the idea that Lucci had lost money during 9/11 which was also an unexpected occurrence

The Automobile Film Club of America has played a supporting role in New York-based film and television productions since 1993. It owns a fleet of vehicles — including police cruisers, taxis and vintage automobiles — that have squired stars and models in advertising shoots, TV shows and action films, including two Spider-Man movies and two “Men in Black” films. Woody Allen rented a 1964 Porsche Cabriolet for one movie and bought an Aston Martin that was totaled in another. “When they crash something, they buy it,” said Ralph Lucci, the owner.

THE CHALLENGE Deciding whether Mr. Lucci, 60, should put his house up as collateral to get a Small Business Administration loan in an attempt to revive his business, which is based in Stapleton, on Staten Island, half a block from the waterfront. In October, Hurricane Sandy’s surge swamped the company’s 6,000-square-foot lot and garage, submerging 57 cars in salt water. (Three vehicles that were on garage lifts avoided damage.) Lost were an ambulance worth $20,000, taxi cabs that cost more than $5,000 and a police crime scene unit vehicle valued at more than $16,000.

“I have mechanics, they all say they’re totally junk,” Mr. Lucci said. “It took five hours to destroy the business.”

After the storm, he spent weeks trying to start cars and ripping out rotting plaster board from his office. The $25,000 tow truck turns over but keeps slipping out of gear. He figures it will cost $400,000 to replace the cars and refurbish the office, the shop and the equipment. Unfortunately, the cars were insured only for liability — adequate, he thought, for transporting cars from Point A to Point B. (Once they are on a movie set, his vehicles are insured by the production.)

THE BACKGROUND Mr. Lucci began supplying cars to the movie industry in 1975. Lucci Auto Props, a business he owned with his brother, was based in Red Hook, Brooklyn. After the two had a falling out, Mr. Lucci said, he walked away from the company and opened a shop that sold exotic cars. In the late ’80s, he took a sales job with a luxury carmaker.

But he never lost interest in the movie business. In 1993, he opened Automobile Film Club, using a lot from the city’s Economic Development Corporation. Mr. Lucci said he worked hard to get production companies the exact vehicles they wanted and stayed on set to make sure everything worked.

Over time, his business grew to 350 cars and 14 full-time employees, mostly secretaries and mechanics. The company survived the long drought after 9/11, when the mayor’s office stopped issuing film permits. Mr. Lucci said a $45,000 S.B.A. loan helped him get by and has been paid back. In 2008, his best year, the business grossed $1.8 million.

The next year, his contract for the lot ended. Unable to find a large, affordable parcel for his fleet, Mr. Lucci downsized, buying one 10,000-square-foot lot and renting another. He sold hundreds of cars. The payroll dwindled to him and his wife.

During Hurricane Irene in 2011, Mr. Lucci said, 30 of his cars were damaged. Because he was carrying only liability insurance on his vehicles, he could not claim damages. The S.B.A. offered him a $6,000 loan at 4 percent interest. He thought the amount was too small, so he turned it down. The following year, he said, was a struggle.

When Hurricane Sandy hit, Mr. Lucci’s vehicles were still insured for liability only. His office and garage were insured, as was $30,000 in equipment. But, like many business owners, he carried no protection against floodwaters or business interruption. After the storm, Mr. Lucci said, he received $5,800 for wind damage and nothing for what was destroyed by water.

THE OPTIONS Mr. Lucci has concluded he has two options. He can close the business for good, or he can borrow a lot of money and try to make another go of it.

Answer 1

Mr Lucci can still function his business withe the present assets which he has in terms of the cars & the other vehicle.He should borrow money and settle his business, he need a financial planner and a insurance advisor who can guide him to a better placement of his finances.He should get a better insurance plan & a more safe place to kee his assets.After the 9/11 case he can also manage his assets well as he still has sufficient assets to cater the the industry.The best utilization of assets should take place from his side and he should focus on maintaining his business with the current assets.