Experts say GM bankruptcy is almost inevitable

[clayinaustin]

Experts say GM bankruptcy is almost inevitable

DETROIT – For General Motors Corp., the task at hand is so difficult that experts say a Chapter 11 bankruptcy filing is all but inevitable.

To remake itself outside of court, GM must persuade bondholders to swap $27 billion in debt for 10 percent of its risky stock. On top of that, the automaker must work out deals with its union, announce factory closures, cut or sell brands and force hundreds of dealers out of business — all in three weeks.

"I just don't see how it's possible, given all of the pieces," said Stephen J. Lubben, a professor at Seton Hall University School of Law who specializes in bankruptcy.

GM has proposed issuing 62 billion new shares, 100 times more than the 611 million now offered publicly

This would make all of the current stock holders have their shares diluted from 100% to 1 percent!

[MacGyver]

I hope they break the unions back.

[RLJ676]

Obama is sticking it to the bondholders. HE wants over 50% for 10B of debt, and 41% for 10B for the UAW, but the bondholders should accept 10% for nearly all of their 27B owed to them? That guarantees a bankruptcy. There's no way 90% of bondholders will accept this deal.

The counter by the bondholders is a much better solution. The convert all their debt to equity, then the gov't doesn't need to convert any, or inject as much cash coming up. Bondholders get over half, UAW 40%. This would keep it from being nationalized and save taxpayers money. Obama will certainly shoot it down, as the bondholders can only have 10%......because he said so. Out of one face he says he doesn't want to run the companies, but then demands half of them.

[Von Bongo]

I hope they break the unions back.

That might be the funniest thing I have read all month!

Apparently you didn't pay attention to Chryslers chapter 11. The union will end up the majority owner. See unions have a lot of voters.

Do some reading.

[phragle]

ok...so if the unions become majority owners...that means they will have to negotiate contracts with themselvs...this should be interesting........ not to mention.. John Q Hubcap installer gets in trouble at work..gets called infront of the boss...asks for a union rep to protect him from... so he loses his job and... sues the union for bad faith representation???

[JupiterSunsation]

Maybe the unions will see when they "own" the automakers that they are their own worst enemy.........

[Expensive Date]

The market is due for a major pull back might even happen this week.This is a good link and explaines the actions of investors the last few weeks.I am usually long but this was to much to fast
http://www.youtube.com/watch?v=M-_OzDc2v5s

[Ratickle]

Obama is sticking it to the bondholders. HE wants over 50% for 10B of debt, and 41% for 10B for the UAW, but the bondholders should accept 10% for nearly all of their 27B owed to them? That guarantees a bankruptcy. There's no way 90% of bondholders will accept this deal.

The counter by the bondholders is a much better solution. The convert all their debt to equity, then the gov't doesn't need to convert any, or inject as much cash coming up. Bondholders get over half, UAW 40%. This would keep it from being nationalized and save taxpayers money. Obama will certainly shoot it down, as the bondholders can only have 10%......because he said so. Out of one face he says he doesn't want to run the companies, but then demands half of them.

It is very refreshing to see you understand. The bankruptcies, under actual law, would have made the companies, employees, and US auto industry very competitive and strong in the long run. Somewhere someone is getting paid off. Hopefully the courts will throw out the Chrysler socialistic reorganization plan because it is illegal as heck under the law, and get them where they need to be.

[phragle]

if you guys ony saw the article I read yesterday... to prarphrase: tho obama administration, now being in control of GMAC will turn it into the fannie mae frddie mac of the auto credit world. by lowering the interest rates and credit requirments GM and chrysler are poised to make significant recoveries. This available credit will steer the market towards gm and chrysler at the expense of ford and toyota.


Oh boy....here we go again......

[Von Bongo]

if you guys ony saw the article I read yesterday... to prarphrase: tho obama administration, now being in control of GMAC will turn it into the fannie mae frddie mac of the auto credit world. by lowering the interest rates and credit requirments GM and chrysler are poised to make significant recoveries. .


Oh boy....here we go again......

If they run it like Fannie and Freddie since the government took over and their continuing losses they ain't making money anytime soon.

BTW anyone else notice that under the latest TALF funding that Honda Motor Credit , Nissan and Volkswagon all participated? So much for Obama and his buy an American car rhetoric.

[RLJ676]

It is very refreshing to see you understand. The bankruptcies, under actual law, would have made the companies, employees, and US auto industry very competitive and strong in the long run. Somewhere someone is getting paid off. Hopefully the courts will throw out the Chrysler socialistic reorganization plan because it is illegal as heck under the law, and get them where they need to be.

It is very frightening how 2 faced he's being on this, and the demands for majority ownership of GM......for the least debt swapped.

I don't get why more people aren't outraged, and demanding they accept the bondholders counter-offer. It saves taxpayer money, and keeps GM in private hands and could avoid the massive value destroyer that would be a prolonged bankruptcy.

[RLJ676]

Maybe the unions will see when they "own" the automakers that they are their own worst enemy.........

This is funny.

Gettelfinger was asked if the funding for the VEBA was going to be enough, and what they'd do if it wasn't, like try and get more from the OEM's (which they'll now own 40% or so). He said he thought it should be, but if it's short they'll have to cut back benefits. Wait a second, how many times have they fought that, funny how you change your tune when the success of the company is in your best interest as well now.

[drpete3]

I think Mi is about to decalare backruptcy

[GB]

I think Mi is about to decalare backruptcy

Ha! Good point...

[Wrinkleface]

I think Mi is about to decalare backruptcy

sad, but true!

[BBB725]

ok...so if the unions become majority owners...that means they will have to negotiate contracts with themselvs...this should be interesting........ not to mention.. John Q Hubcap installer gets in trouble at work..gets called infront of the boss...asks for a union rep to protect him from... so he loses his job and... sues the union for bad faith representation???

It could be more interesting than that, UAW owns 55% of Chrysler. The UAW approaches a nonunion shop like Honda which is a competitor of Chrysler, so being my competitor want to join me?

[phragle]

I think Mi is about to decalare backruptcy

At least 5 years too late at that....

[Ratickle]

This is funny.

Gettelfinger was asked if the funding for the VEBA was going to be enough, and what they'd do if it wasn't, like try and get more from the OEM's (which they'll now own 40% or so). He said he thought it should be, but if it's short they'll have to cut back benefits. Wait a second, how many times have they fought that, funny how you change your tune when the success of the company is in your best interest as well now.

Here's a link to an article about Airlines vs Autos. The main difference. Autos are not controlled by the government, airlines were able to eliminate their pension burdens, and there were no foreign competitors in their back yards.

By giving the auto companies to the unions, their final doom has been completely sealed. Still have all the issues with all ongoing pension requirements. Our government is stupid. All they do is worry about how to save the most votes for the next election. Never what needs to be done for the long term health of this country.

http://www.latimes.com/business/la-f...,7696678.story

[Ratickle]

At least 5 years too late at that....

And they actually try to duplicate Michigan's idiotic policies towards business at the Federal level now. That dumb broad sure set a good example to follow....

[RLJ676]

Here's a link to an article about Airlines vs Autos. The main difference. Autos are not controlled by the government, airlines were able to eliminate their pension burdens, and there were no foreign competitors in their back yards.

By giving the auto companies to the unions, their final doom has been completely sealed. Still have all the issues with all ongoing pension requirements. Our government is stupid. All they do is worry about how to save the most votes for the next election. Never what needs to be done for the long term health of this country.

http://www.latimes.com/business/la-f...,7696678.story

I'm less concerned with UAW's partial ownership than the gov'ts majority in the case of GM. The UAW will have board representation chosen by the fund managers for the VEBA. Basically, the same as any other equity holders with 40% with the only interest being the stock return, not the UAW. The joe blows on the line won't like it or get it, but they won't have any say in the VEBA's investments, including GM equity.