GM Bankruptcy
05-29-2009, 08:32 PM
#31
Senior Member
Join Date: 06-29-2008
Location: Crystal Lake
Posts: 839
Well Looks like Monday its Over Folks. Sad indeed but at this point very much the only option.
End of an Era: GM Going Bankrupt on Monday
Posted May 29, 2009 12:20pm EDT by Henry Blodget
Related: GM, F, HMC, TM, TTM, GT, AN
From TheBusinessInsider.com, May 29, 2009
GM will file for bankruptcy on Monday, Bloomberg says. It will then split into a "good GM, bad GM," with the good GM looking to be profitable within 60-90 days. In a change from the previous plan, current shareholders will get nothing.
When General Motors Corp. files for bankruptcy protection next week, a Dickensian tale of two legal processes will unfold, according to Bloomberg:
* In one, a judge will be told that a new entity will emerge within three months with prized assets and a plan to revisit the best of times when GM was the world’s largest carmaker. In the other, Bleak House comes to bankruptcy court as creditors shut out of the new entity will be told to argue for perhaps years about who gets company properties the new GM doesn’t want.
* In the rosy scenario, the new company, armed with vehicles from GM’s Cadillac, Chevrolet, Buick and GMC divisions, plans to begin making money again within 60 to 90 days, while a bankruptcy court sells or liquidates unprofitable brands such as Saturn and Hummer. Saab already is in bankruptcy.
Here's who gets what:
* The new GM will take some liabilities with it such as an auto supplier financing program and warranty obligations. Detroit-based GM had global liabilities of $176.4 billion as of Dec. 31, 2008.
* Pontiac models will be scrapped, along with as many as 16 factories, some of which may involve massive cleanup costs. GM must also try to find buyers for its Hummer and Saturn units after not finding any takers so far.
* Given the planned stakes, the new GM will be controlled by the U.S. government, with the Canadian government possibly owning a small share. A union health-care trust will own 17.5 percent and 10 percent will be given to the old GM to hand to creditors to resolve claims, according to GM’s filing.
* The Treasury plans to allocate that 10 percent stake to bondholders, plus offer warrants to buy an additional 15 percent of equity, provided a “satisfactory” number of holders agree to go along with GM’s restructuring program, according to the filing. Bondholders may get nothing if they don’t satisfy the Treasury by 5 p.m. New York time tomorrow, GM said...
* GM’s current stockholders would get no recovery from the new-entity asset sale, according to the filing, a change from an earlier plan to give them 1 percent of the new company.
Here's to a Fast and Speedy New GM
End of an Era: GM Going Bankrupt on Monday
Posted May 29, 2009 12:20pm EDT by Henry Blodget
Related: GM, F, HMC, TM, TTM, GT, AN
From TheBusinessInsider.com, May 29, 2009
GM will file for bankruptcy on Monday, Bloomberg says. It will then split into a "good GM, bad GM," with the good GM looking to be profitable within 60-90 days. In a change from the previous plan, current shareholders will get nothing.
When General Motors Corp. files for bankruptcy protection next week, a Dickensian tale of two legal processes will unfold, according to Bloomberg:
* In one, a judge will be told that a new entity will emerge within three months with prized assets and a plan to revisit the best of times when GM was the world’s largest carmaker. In the other, Bleak House comes to bankruptcy court as creditors shut out of the new entity will be told to argue for perhaps years about who gets company properties the new GM doesn’t want.
* In the rosy scenario, the new company, armed with vehicles from GM’s Cadillac, Chevrolet, Buick and GMC divisions, plans to begin making money again within 60 to 90 days, while a bankruptcy court sells or liquidates unprofitable brands such as Saturn and Hummer. Saab already is in bankruptcy.
Here's who gets what:
* The new GM will take some liabilities with it such as an auto supplier financing program and warranty obligations. Detroit-based GM had global liabilities of $176.4 billion as of Dec. 31, 2008.
* Pontiac models will be scrapped, along with as many as 16 factories, some of which may involve massive cleanup costs. GM must also try to find buyers for its Hummer and Saturn units after not finding any takers so far.
* Given the planned stakes, the new GM will be controlled by the U.S. government, with the Canadian government possibly owning a small share. A union health-care trust will own 17.5 percent and 10 percent will be given to the old GM to hand to creditors to resolve claims, according to GM’s filing.
* The Treasury plans to allocate that 10 percent stake to bondholders, plus offer warrants to buy an additional 15 percent of equity, provided a “satisfactory” number of holders agree to go along with GM’s restructuring program, according to the filing. Bondholders may get nothing if they don’t satisfy the Treasury by 5 p.m. New York time tomorrow, GM said...
* GM’s current stockholders would get no recovery from the new-entity asset sale, according to the filing, a change from an earlier plan to give them 1 percent of the new company.
Here's to a Fast and Speedy New GM
05-29-2009, 09:32 PM
#33
Senior Member
Join Date: 11-11-2007
Location: Sheboygan WI
Posts: 364
Presumably Pontiac will stay as part of "old GM" and will be wound up over a period of several months, but since "old GM" will be the half that has all the obligations to what "new GM" leaves behind, it may linger on for some time as it gos through much legal wrangling. I'd guess that Pontiacs will be for sale for some yet, at a progressively dwindling network of dealers. May be time to pick up a bargain, if you aren't going for one of the fire-sale Chryslers...
05-29-2009, 10:11 PM
#34
Senior Member
Join Date: 06-29-2008
Location: Crystal Lake
Posts: 839
Presumably Pontiac will stay as part of "old GM" and will be wound up over a period of several months, but since "old GM" will be the half that has all the obligations to what "new GM" leaves behind, it may linger on for some time as it gos through much legal wrangling. I'd guess that Pontiacs will be for sale for some yet, at a progressively dwindling network of dealers. May be time to pick up a bargain, if you aren't going for one of the fire-sale Chryslers...
05-29-2009, 11:51 PM
#35
Senior Member
Join Date: 03-28-2008
Location: Oshawa
Posts: 1,115
We were told on May 25th that GM "will" file for bancruptcy protection when the CAW meeting for the new contract was revealed to us. It is the only way to resurrect the company. It's just too bad the governments in the U.S. and Can. didn't use the same import/export rules on autos that Japan, Korea and others use to restrict imports entering their countries. The trade differences in the auto sector are completely one sided.
05-31-2009, 05:16 PM
#37
Senior Member
Join Date: 06-29-2008
Location: Crystal Lake
Posts: 839
DETROIT – General Motors Corp. was making final preparations Sunday for its bankruptcy protection announcement after bondholders accepted a sweetened deal, smoothing the way for the company's reorganization.
A statement Sunday from a group of large, institutional bondholders said 54 percent of GM bondholders agreed to exchange their unsecured bonds for a 10 percent stake in a newly restructured company, plus warrants to purchase a greater share later. Their acceptance is seen as critical in moving the company through bankruptcy quickly.
GM and the Treasury Department, which has been guiding the Detroit automaker toward a rescue plan that will give taxpayers more than a 70 percent stake in the company, were quiet on the bondholders' decision.
Although GM has not confirmed it will seek bankruptcy protection, Chief Executive Officer Fritz Henderson has scheduled a news conference Monday morning in New York. President Barack Obama is also expected to give a speech addressing the Detroit automaker's fate.
The Treasury Department must find that there is sufficient acceptance for the deal to move forward. In a previous bond exchange offer, the Treasury demanded participation of 90 percent of bondholders, representing a debt exchange of $24 billion.
In Germany, the government agreed Sunday to loan GM's Opel unit $2.1 billion, a move necessary for Magna International Inc. to acquire the company.
The Canadian auto parts supplier Magna will take a 20 percent stake in Opel and Russian-owned Sberbank will take 35 percent, giving the two businesses a majority. GM retains 35 percent of Opel, with the remaining 10 percent going to employees.
The German funds are available to Opel immediately, as it attempts to shield itself from cuts if GM files for bankruptcy protection. Opel employs 25,000 people in Germany, nearly half of GM Europe's work force. Under the deal, four factories in Germany would stay open, though Magna previously has said it would need to shed some 2,600 jobs.
GM is racing to meet the government's Monday deadline to qualify for more aid. It already has received about $20 billion in government loans and could get $30 billion more to make it through what is expected to be a 60- to 90-day reorganization in bankruptcy court.
Beyond the bankruptcy announcement Monday, GM is expected to reveal 14 plants it intends to close and name the buyer of its Hummer division.
Treasury Secretary Timothy Geithner, who was traveling to China, followed developments closely Sunday taking a military aircraft with the latest in communications equipment that allowed him frequent contact with Steven Rattner, head of the administration's auto task force, and Obama economic aide Lawrence Summers.
The Treasury on Thursday offered bondholders 10 percent of a newly formed GM's stock, plus warrants to buy 15 percent more to erase the debt. Last week, GM withdrew an offer of 10 percent equity after only 15 percent of the thousands of bondholders signed up.
The current 54 percent acceptance represents only $14.6 billion, but by lining up support in advance of a bankruptcy protection filing, GM is likely to find it easier to persuade a judge to apply terms of the sweetened offer to the rest of its unsecured debt.
It could also help the automaker get through the court process more quickly, said Robert Gordon, head of the corporate restructuring and bankruptcy group at Clark Hill PLC in Detroit.
"The more consensus you have, the more likely it is you'll be able to move through the bankruptcy process in an expeditious fashion with less resistance," Gordon said.
The company made a huge stride toward restructuring Friday when the United Auto Workers union agreed to a cost-cutting deal.
GM's fate and the federal government's intervention was the topic on several Sunday morning talk shows.
"I think the government auto bailout was a big mistake," said Sen. Mitch McConnell, R-Ky., on CNN's "State of the Union" program.
He said the companies could have been allowed to go into the bankruptcy process much earlier, without providing additional government money, "and ended up in the same place."
In a typical Chapter 11 bankruptcy case, the company files a plan of reorganization that must be voted on by creditors. In each class of creditors, the plan would have to be approved by holders of two-thirds of the claims and a majority of the number of individual creditors who vote.
But the GM case is anything but ordinary, and it appears the company will sell some or all of its assets to a new entity that would become the new GM, rather than submit a plan to reorganize the old company.
Under a so-called Section 363 sale, the prospective buyer and seller present a fully negotiated asset purchase agreement for approval by the court.
Creditors still can lodge objections, but GM could avoid the drawn-out fights between competing creditors, such as bondholders and workers, that often occur.
Chrysler LLC, which filed for bankruptcy protection April 30, chose a similar path. A judge heard three days of testimony and arguments last week over the sale of most of Chrysler's assets to Italian carmaker Fiat Group SpA.
U.S. Judge Arthur Gonzalez is expected to approve the sale Monday, pushing Chrysler closer to its goal of a speedy exit from bankruptcy protection. But an appeal is likely from three Indiana state pension and construction funds, which invested in Chrysler debt and say the deal isn't fair. That may force Chrysler to further postpone the deal's closing.
GM's stock tumbled to the lowest price in the company's 100-year history on Friday, closing at just 75 cents after trading as low as 74 cents. In a Chapter 11 bankruptcy reorganization, the shares would become virtually worthless.
A statement Sunday from a group of large, institutional bondholders said 54 percent of GM bondholders agreed to exchange their unsecured bonds for a 10 percent stake in a newly restructured company, plus warrants to purchase a greater share later. Their acceptance is seen as critical in moving the company through bankruptcy quickly.
GM and the Treasury Department, which has been guiding the Detroit automaker toward a rescue plan that will give taxpayers more than a 70 percent stake in the company, were quiet on the bondholders' decision.
Although GM has not confirmed it will seek bankruptcy protection, Chief Executive Officer Fritz Henderson has scheduled a news conference Monday morning in New York. President Barack Obama is also expected to give a speech addressing the Detroit automaker's fate.
The Treasury Department must find that there is sufficient acceptance for the deal to move forward. In a previous bond exchange offer, the Treasury demanded participation of 90 percent of bondholders, representing a debt exchange of $24 billion.
In Germany, the government agreed Sunday to loan GM's Opel unit $2.1 billion, a move necessary for Magna International Inc. to acquire the company.
The Canadian auto parts supplier Magna will take a 20 percent stake in Opel and Russian-owned Sberbank will take 35 percent, giving the two businesses a majority. GM retains 35 percent of Opel, with the remaining 10 percent going to employees.
The German funds are available to Opel immediately, as it attempts to shield itself from cuts if GM files for bankruptcy protection. Opel employs 25,000 people in Germany, nearly half of GM Europe's work force. Under the deal, four factories in Germany would stay open, though Magna previously has said it would need to shed some 2,600 jobs.
GM is racing to meet the government's Monday deadline to qualify for more aid. It already has received about $20 billion in government loans and could get $30 billion more to make it through what is expected to be a 60- to 90-day reorganization in bankruptcy court.
Beyond the bankruptcy announcement Monday, GM is expected to reveal 14 plants it intends to close and name the buyer of its Hummer division.
Treasury Secretary Timothy Geithner, who was traveling to China, followed developments closely Sunday taking a military aircraft with the latest in communications equipment that allowed him frequent contact with Steven Rattner, head of the administration's auto task force, and Obama economic aide Lawrence Summers.
The Treasury on Thursday offered bondholders 10 percent of a newly formed GM's stock, plus warrants to buy 15 percent more to erase the debt. Last week, GM withdrew an offer of 10 percent equity after only 15 percent of the thousands of bondholders signed up.
The current 54 percent acceptance represents only $14.6 billion, but by lining up support in advance of a bankruptcy protection filing, GM is likely to find it easier to persuade a judge to apply terms of the sweetened offer to the rest of its unsecured debt.
It could also help the automaker get through the court process more quickly, said Robert Gordon, head of the corporate restructuring and bankruptcy group at Clark Hill PLC in Detroit.
"The more consensus you have, the more likely it is you'll be able to move through the bankruptcy process in an expeditious fashion with less resistance," Gordon said.
The company made a huge stride toward restructuring Friday when the United Auto Workers union agreed to a cost-cutting deal.
GM's fate and the federal government's intervention was the topic on several Sunday morning talk shows.
"I think the government auto bailout was a big mistake," said Sen. Mitch McConnell, R-Ky., on CNN's "State of the Union" program.
He said the companies could have been allowed to go into the bankruptcy process much earlier, without providing additional government money, "and ended up in the same place."
In a typical Chapter 11 bankruptcy case, the company files a plan of reorganization that must be voted on by creditors. In each class of creditors, the plan would have to be approved by holders of two-thirds of the claims and a majority of the number of individual creditors who vote.
But the GM case is anything but ordinary, and it appears the company will sell some or all of its assets to a new entity that would become the new GM, rather than submit a plan to reorganize the old company.
Under a so-called Section 363 sale, the prospective buyer and seller present a fully negotiated asset purchase agreement for approval by the court.
Creditors still can lodge objections, but GM could avoid the drawn-out fights between competing creditors, such as bondholders and workers, that often occur.
Chrysler LLC, which filed for bankruptcy protection April 30, chose a similar path. A judge heard three days of testimony and arguments last week over the sale of most of Chrysler's assets to Italian carmaker Fiat Group SpA.
U.S. Judge Arthur Gonzalez is expected to approve the sale Monday, pushing Chrysler closer to its goal of a speedy exit from bankruptcy protection. But an appeal is likely from three Indiana state pension and construction funds, which invested in Chrysler debt and say the deal isn't fair. That may force Chrysler to further postpone the deal's closing.
GM's stock tumbled to the lowest price in the company's 100-year history on Friday, closing at just 75 cents after trading as low as 74 cents. In a Chapter 11 bankruptcy reorganization, the shares would become virtually worthless.
05-31-2009, 07:47 PM
#38
Senior Member
Join Date: 11-15-2008
Location: Newburgh, NY
Posts: 1,599
100+ Years of GM Excellence
<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" /><o:p>Well, GM was riding high from 1908 to 2008. <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" /><st1:stockticker>ONE</st1:stockticker> HUNDRED YEARS!!! Although American industry is currently ailing, this still shows its resilience. As much as typical Americans love Asian car mfgs, I wonder if these mfgs can make a claim to consistent dominance and longevity as GM has?<o:p></o:p>
</o:p>
</o:p>
06-01-2009, 08:15 AM
#39
Senior Member
Thread Starter
Join Date: 01-28-2009
Location: Raleigh, NC
Posts: 154
GM Files Bankruptcy to Spin Off More Competitive Firm
http://www.bloomberg.com/apps/news?p...d=aZ94r84yT8Ds
June 1 (Bloomberg) -- General Motors Corp., the world’s largest carmaker until its 77-year reign ended last year, filed for bankruptcy protection in the U.S. with a plan to create a 21st-century company that can compete in world markets.
Detroit-based GM is the largest manufacturer to file for bankruptcy, surpassing Chrysler LLC. The carmaker plans to launch a new company in 60 to 90 days, armed with vehicles from its Cadillac, Chevrolet, Buick and GMC units for the U.S. market. A federal bankruptcy judge would supervise the sale or liquidation of unprofitable brands, such as Saturn and Hummer, and at least 11 unwanted factories.
June 1 (Bloomberg) -- General Motors Corp., the world’s largest carmaker until its 77-year reign ended last year, filed for bankruptcy protection in the U.S. with a plan to create a 21st-century company that can compete in world markets.
Detroit-based GM is the largest manufacturer to file for bankruptcy, surpassing Chrysler LLC. The carmaker plans to launch a new company in 60 to 90 days, armed with vehicles from its Cadillac, Chevrolet, Buick and GMC units for the U.S. market. A federal bankruptcy judge would supervise the sale or liquidation of unprofitable brands, such as Saturn and Hummer, and at least 11 unwanted factories.
