tammix

interesting to see a company that collapsed into bankruptcy and was rescued with a $50 billion infusion from taxpayers, some think chapter 11 is a loophole in the US financial system that benefits greedy and unethical executives to wash their mistakes, eliminate the former shareholders and return to rip off new ones

MrBottomTooth

Anybody buy some shares today?

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GrouchyAdmin

Why not? At least then you can get a piece of paper for your cash.

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96ukssob

yeah, pretty fucked up just to keep some salaries rolling for big wigs

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SallyRand

The lack of buisness acumen around here is staggering.

Doctor Dre

Moral Hazard. Too late for that now anyways.

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marketsmart

wtf are you talking about lobster tail cunt...

just because they made a business decision doesnt mean its right..

they fucked pensioners and shareholders that helped build their company because they were too stupid to compete with the japanese...

i have never agreed with the idea that a publicly held corp can liquidate its shareholders with a chap 11 reorg...

shareholders should become creditors and should get stock as compensation if the company can emerge from chap 11...







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Tom_PM

It's profitable again, and there would be no bigwigs without the thousands of smallwigs who still have their jobs thanks to the government. The money will be 100% recovered now that the stock is going public. Isn't that money well spent?

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SallyRand

You should remember that it was Barack H.Obama who ordered the GM bankruptcy filing.............

http://www.forbes.com/2009/04/09/gm-...ankruptcy.html

"Forbes.com

Fixed-Income Watch
Obama Plays Chicken With GM Bondholders
Richard Lehmann, Forbes/Lehmann Income Securities Investor 04.09.09, 6:00 PM ET

Somehow in all its rhetoric about saving the Detroit-based auto industry, the Obama administration forgot about all the parties it needs on board in order to make that happen. Only after committing itself to this undefined task did it began to do the math and find its error.

On the one hand, the industry is burdened with mandates to produce more efficient and greener cars that few want to buy. On the other hand, General Motors is being asked to honor an overwhelming legacy cost burden to its union workers while disavowing its obligations to its bondholders.

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Since the White House has decided to take the lead in restructuring GM, having thrown CEO Rick Wagoner and most of the board of directors out, they have been busy putting out strong rhetoric about seeing a bankruptcy filing as the most likely route to pursue in order to restructure GM. As a matter of fact, it probably would be the best route, but since when has best ever outweighed political expediency in Washington?

Aside from this, Chapter 11 bankruptcy means the government relinquishes control of the restructuring process to a judge and to a voting process that they cannot control. Sure, they say they will go into court with a pre-packaged plan that they will ram through in short order, but this is pure fantasy. First of all, you need majority agreement by the affected parties in order to even have a plan to present. This is unlikely to be achieved in the next six months, never mind 60 days.

Second of all, the fastest a complex pre-packaged plan has ever gotten through bankruptcy court is seven months, and this plan will be very complex.

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All this talk about a bankruptcy filing is pure posturing. The real goal is to scare enough bondholders into accepting as low a settlement payout as possible. With $28 billion in bonds, if they can scare even 60% of the bondholders into taking the rumored 8 cents cash, 16 cents of new debt and 90% of the equity (worth maybe 12 cents), they will have converted $16.8 billion of debt into equity at a cash cost of $2.2 billion. That would be the best-spent money in this entire government bailout. Would they really forgo this sure thing for the uncertainties of the alternative?

And let's not lose sight of some of the other hazards of a bankruptcy filing. President Obama personally assured the public that the government would stand behind all car warranties in order to defuse the argument that no one would buy a car from a bankrupt company. Here's a news flash for you: Ssangyong, which is South Korea's smallest automaker, said its vehicle sales plunged 75.5% last month as consumers shunned buying vehicles from the bankrupt company. What the president cannot assure is that after a bankruptcy there will still be a dealer you can take your car to who is within 50 miles of your home and is not scheduling warranty work into next month.

Let's not forget the auto workers union who are the main people Obama wants to please. They hate bankruptcy because their contracts can be canceled, and more onerous terms are then sure to follow. Another problem with bankruptcy court is that once in court, bondholders stand on par with the unions as to the seniority of their claims. Hence, in court, you can't screw over the bondholders without doing equal damage to the $30 billion in union health care claims. This is the political element in the GM story that, in the end, will override mere common-sense arguments.

But just to round out the common-sense arguments, a bankruptcy filing would trigger $37.4 billion in payments on GM credit default swap contracts currently outstanding. Many of those were bought by people who also hold bonds and would actually welcome a bankruptcy filing. They could then collect money on the default contracts, that would otherwise expire worthless, and still have a claim in bankruptcy court. Good luck, Mr. Obama, negotiating a voluntary settlement with those folks.

Here's my advice to the White House: Call in the dummies who wrote those $37.4 billion in default swaps and offer them a guarantee you won't force GM into bankruptcy in return for $10 billion. Now there's a game of chicken the government deserves to win. This would be a lot fairer and more constructive than asking bondholders to take a huge haircut or filing Chapter 11. But then again, maybe not. I fear that when you call in the parties who wrote the swaps, the dumbest guys in the room will be from AIG."

Excerpted from the May issue of Forbes/Lehmann Income Securities Investor. Click here for more analysis by editor Richard Lehmann and to subscribe to Forbes/Lehmann Income Securities Investor .

Coup

Nationalize GM. Execute all their CEOs

SallyRand

Reads like you want to turn the USA Into Red China.

12clicks

this is a lie trotted out to fool the rabble.

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marketsmart

it was the right decision.. the only other option was to just let them fail. they were so in the red that the govt would have had to pump 100's of billions into them to keep them afloat.

the ripple effect to so many other companies that would fail without gm brought that total cost to close to a trillion i believe..

my point was that chap 11 should not allow for companies to fuck their shareholders, which by the way never includes their preferred shareholders who always end up getting some type of backroom deal....




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NemesisEnforcer

That's the reason for the bailout.

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