GM eyes Bankruptcy, sell company to US Government

[BTOWN_HUSTLA]

http://www.reuters.com/article/mergersNews/idUSN1943363120090519

General Motors Corp's (GM.N) plan for a bankruptcy filing involves a quick sale of the company's healthy assets to a new company initially owned by the U.S. government, a source familiar with the situation said on Tuesday.

The source, who would not be named because he was not cleared to speak with the media, did not specify a purchase price. The new company is expected to honor the claims of secured lenders, possibly in full, according to the source.

The remaining assets of GM would stay in bankruptcy protection to satisfy other outstanding claims.

GM has about $6 billion in secured debt, including a secured revolving credit and bank debt.

The government's plans include giving stakes in the new company to GM's union and bondholders, although the ownership structure of the company is still being negotiated, said the source who is familiar with the company's plans.

 

[The_Lillard_King]

WASHINGTON (Reuters) – U.S. President Barack Obama took aim at climate-warming greenhouse gases on Tuesday and obliged the struggling auto industry to make more efficient cars by imposing tough national standards to cut emissions and increase gas mileage.

Obama said the new standards, announced at a White House ceremony attended by auto industry and union leaders, would reduce U.S. dependence on foreign oil and give five years of cost certainty to an auto industry battling to survive.

http://news.yahoo.com/s/nm/20090519/bs_nm/us_obama_emissions

I wonder if there is some wierd conflict of interest going on here. If the US owns GM . . . couldn't they propose legislation that would benefit GM over it's competitors?

 

[maxiep]

What a clusterfuck. GM just should have declared bankruptcy from the get go. That would have guaranteed a free and unfettered auto company going forward. Now, we'll have a car designed by the Democratic Party. Fucking perfect. Good luck buying an American-made pickup truck or SUV.

 

[PapaG]

What a clusterfuck. GM just should have declared bankruptcy from the get go. That would have guaranteed a free and unfettered auto company going forward. Now, we'll have a car designed by the Democratic Party. Fucking perfect. Good luck buying an American-made pickup truck or SUV.

How can it be considered "bankruptcy" when bond holders are bypassed in the selling of assets? This isn't a "bankruptcy", it is the federal government stealing the assets of a company and deciding who gets to buy these assets. This is theft and I don't see how it can be constitutional. I haven't even got to the part yet where the Obama administration gets to pick and choose its new board. What an outrage.

 

[PapaG]

Can somebody please explain to me what was the point of "bailing out" these automakers with billions of tax $$? What happened to that money?

 

[SodaPopinski]

Good luck buying an American-made pickup truck or SUV.

Yeah, because otherwise the American public would have been lined up for blocks for the opportunity to purchase a non-warrantied, service-disadvantaged gas guzzler.

-Pop

 

[PapaG]

Yeah, because otherwise the American public would have been lined up for blocks for the opportunity to purchase a non-warrantied, service-disadvantaged gas whore.

-Pop

Ford stopped making SUVs?

 

[SodaPopinski]

Ford stopped making SUVs?

I was merely countering maxiep's point. A bankrupt company doesn't exactly inspire consumer confidence that warranties or service contracts will be honored.

-Pop

 

[maxiep]

Yeah, because otherwise the American public would have been lined up for blocks for the opportunity to purchase a non-warrantied, service-disadvantaged gas guzzler.

-Pop

The most successful models sold in the US by GM, Ford and Chrysler are all trucks and SUVs.

 

[PapaG]

The most successful models sold in the US by GM, Ford and Chrysler are all trucks and SUVs.

Well, at least until the President of the World opened his mouth today and imposed gas mileage limits on American-made vehicles.

 

[maxiep]

Well, at least until the President of the World opened his mouth today and imposed gas mileage limits on American-made vehicles.

Just remember, the Government knows better what you need than you do.

 

[SodaPopinski]

The most successful models sold in the US by GM, Ford and Chrysler are all trucks and SUVs.

You're missing my point. This move was made to shore up the confidence of consumers that warranties and service contracts on new purchases would be honored even as the parent company was in bankruptcy.

-Pop

 

[BTOWN_HUSTLA]

WASHINGTON (Reuters) – U.S. President Barack Obama took aim at climate-warming greenhouse gases on Tuesday and obliged the struggling auto industry to make more efficient cars by imposing tough national standards to cut emissions and increase gas mileage.

Obama said the new standards, announced at a White House ceremony attended by auto industry and union leaders, would reduce U.S. dependence on foreign oil and give five years of cost certainty to an auto industry battling to survive.

http://news.yahoo.com/s/nm/20090519/bs_nm/us_obama_emissions

I wonder if there is some wierd conflict of interest going on here. If the US owns GM . . . couldn't they propose legislation that would benefit GM over it's competitors?

they're going to make california emission standards nationwide standards. He also wants to have cars average (probably by maker?) 35mpg.

If you live in California, you know how lame the DMV and smog tests are.

 

[Minstrel]

If you live in California, you know how lame the DMV and smog tests are.

Smog tests aren't much fun, but the DMV is actually great in California (where I've lived--Bay Area and San Diego). It's efficient and quick...I've never made an appointment and I've gotten my business done within 15-20 minutes.

 

[BTOWN_HUSTLA]

Yeah. Just try registering your car from out of state, having to get a new emissions system put in, etc. DMV has been fine for me, I actually do most of it at AAA. but they have morons working there, the forms are all fucked up and jesus, its like $170 a year just to have my car registered.

 

[barfo]

Smog tests aren't much fun, but the DMV is actually great in California (where I've lived--Bay Area and San Diego). It's efficient and quick...I've never made an appointment and I've gotten my business done within 15-20 minutes.

They must have changed the system down there? 10 or 15 years ago you could take your car to any licensed shop and have it inspected. Cost me an extra $50 to bribe the guy to pass my stinky old beater without doing the test. That car was not just unsafe at any speed, it was unsafe at idle too.

barfo

 

[barfo]

What a clusterfuck. GM just should have declared bankruptcy from the get go.

Yes, they should have.

That would have guaranteed a free and unfettered auto company going forward. Now, we'll have a car designed by the Democratic Party. Fucking perfect. Good luck buying an American-made pickup truck or SUV.

You haven't visited your local car dealership lately, have you? There are vast numbers of trucks and SUVs available, at bargain prices.

barfo

 

[barfo]

How can it be considered "bankruptcy" when bond holders are bypassed in the selling of assets?

The last guy to invest usually gets first call on the assets. The gummint was the last guy to invest.

This isn't a "bankruptcy", it is the federal government stealing the assets of a company and deciding who gets to buy these assets. This is theft and I don't see how it can be constitutional. I haven't even got to the part yet where the Obama administration gets to pick and choose its new board. What an outrage.

You think the taxpayers should get nothing for bailing out GM?

barfo

 

[julius]

Here's my chance to get a Corvette for a song!

 

[Minstrel]

They must have changed the system down there? 10 or 15 years ago you could take your car to any licensed shop and have it inspected.

That's basically still the system. Except you have to find an "inspection only" shop (one that doesn't do repairs) so that the shop won't have incentive to fail the car.

I'm just lazy, I wasn't really criticizing the system.

 

[maxiep]

The last guy to invest usually gets first call on the assets. The gummint was the last guy to invest.

That's not true. Back taxes are first in line, followed by unsuboordinated debt, followed by suboordinated debt, followed by mezzanine debt, followed by preferred stock followed by common stock. The government is cutting in line.

You think the taxpayers should get nothing for bailing out GM?

barfo

We didn't bail them out. We were used to transfer the wealth of GM to the unions.

 

[barfo]

That's not true. Back taxes are first in line, followed by unsuboordinated debt, followed by suboordinated debt, followed by mezzanine debt, followed by preferred stock followed by common stock. The government is cutting in line.

And I say good for the government. It should cut the best deal for us that it can.
More to the point, if you are listing government as a stockholder, I think you might be mislabeling the nature of the bailout agreements.

We didn't bail them out. We were used to transfer the wealth of GM to the unions.

GM has wealth? I think they are bankrupt, isn't that the absence of wealth?

barfo

 

[maxiep]

And I say good for the government. It should cut the best deal for us that it can.
More to the point, if you are listing government as a stockholder, I think you might be mislabeling the nature of the bailout agreements.

You don't find that scary that the Government can cut the queue? You believe the government to be a lot more benevolent than do I. I believe this move to be very dangerous. How can you have a healthy and secure investment climate when the government can nationalize any industry they see fit? That move is closer to something that would happen in Venezuela.

GM has wealth? I think they are bankrupt, isn't that the absence of wealth?

barfo

Once you cut out the bondholders, GM still has assets. They went to the UAW. It's good to be a FOO.

 

[barfo]

You don't find that scary that the Government can cut the queue? You believe the government to be a lot more benevolent than do I. I believe this move to be very dangerous. How can you have a healthy and secure investment climate when the government can nationalize any industry they see fit? That move is closer to something that would happen in Venezuela.

I'm not convinced they are cutting the queue - I'd have to see the bailout agreement to know where the government stands in relation to the other parties.

Secondly, this isn't "nationalizing any industry they see fit". This is bailing out a failed company. Note nothing is happening to Ford (or Toyota, for that matter).

Once you cut out the bondholders, GM still has assets. They went to the UAW. It's good to be a FOO.

What does FOO stand for? The assets haven't gone anywhere yet.

barfo

 

[maxiep]

I'm not convinced they are cutting the queue - I'd have to see the bailout agreement to know where the government stands in relation to the other parties.

Like I wrote in the previous post, there is a heirarchy to debt and equity. The government decided to jump the line. Why do you think the government brought in the bondholders and tried to strongarm them? Because the government put themselves first.

Secondly, this isn't "nationalizing any industry they see fit". This is bailing out a failed company. Note nothing is happening to Ford (or Toyota, for that matter).

They're trying their hardest to not take back the TARP money from banks. Mind you, they insisted that evehn healthy banks take the money to not stigmatize the weaker banks. They tried to get Ford to take money, but Ford was too smart. GM and Chrysler tried in a futile attempt to avoid bankruptcy, but the Government decided to act like the majority shareholder in a private company rather than a debtholder. For God's sake, they told Chrysler how much to spend on advertising and fired GM's CEO.

What does FOO stand for? The assets haven't gone anywhere yet.

barfo

Friend of Obama.

 

[barfo]

Like I wrote in the previous post, there is a heirarchy to debt and equity. The government decided to jump the line. Why do you think the government brought in the bondholders and tried to strongarm them? Because the government put themselves first.

Like I wrote in the previous post, it isn't clear to me where in the hierarchy the government sits. You claim they jumped the line. Based on what? Specifically where in the line do you think they belong, and why?

They're trying their hardest to not take back the TARP money from banks. Mind you, they insisted that evehn healthy banks take the money to not stigmatize the weaker banks.

And yet some banks did turn down the TARP money, so the insisting must have been either spotty or not very, uh, insistent.

They tried to get Ford to take money, but Ford was too smart.

Ford was too not bankrupt.

GM and Chrysler tried in a futile attempt to avoid bankruptcy, but the Government decided to act like the majority shareholder in a private company rather than a debtholder.

Wait, you are saying they are a debtholder? Wouldn't that put them at the top of your hierarchy? So maybe they aren't cutting in line after all?

For God's sake, they told Chrysler how much to spend on advertising and fired GM's CEO.

Both good ideas, since clearly management at those companies had failed. Someone has to be the adult, and since GM's board failed to act...

I'm baffled by the suggestion that we should pour money into failing companies and exercise no control over them. I can understand thinking that the bailouts were bad ideas to begin with, but given that we did the bailouts, it is incumbent upon us to maximize the value of the money spent. Leaving management which has a track record of failure in charge is not the way to do that.

Friend of Obama.

I pity the FOO!

barfo

 

[BTOWN_HUSTLA]

we shouldn't pour money into failing companies.

 

[barfo]

we shouldn't pour money into failing companies.

Like I said, I understand that point of view. But that ship has sailed (or sunk, if you prefer that metaphor).

barfo

 

[BTOWN_HUSTLA]

shocked!

 

[PapaG]

You don't find that scary that the Government can cut the queue? You believe the government to be a lot more benevolent than do I. I believe this move to be very dangerous. How can you have a healthy and secure investment climate when the government can nationalize any industry they see fit? That move is closer to something that would happen in Venezuela.



Once you cut out the bondholders, GM still has assets. They went to the UAW. It's good to be a FOO.

True, except that Chavez is smart enough to drill for as much oil as he can to keep an outside source of income coming via oil exports. Our dunderhead leadership is taking the opposite approach and trying to decrease our drilling of the most valuable asset in the world.

In other words, long-term, Venezuela may be better set than the USA in terms of the world economy. Solar panels and windmills don't drive commerce, and accepting higher oil prices while refusing to drill for our own will only expediate a massive wave of inflation.