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GM and Chrysler have until Tuesday to complete the financial restructuring demanded by the government under the terms of the bridge loans. It is unlikely that they will make that target. The sticking point for GM is unwillingness on the part of bondholders to agree to what's being asked: GM needs to transform $27 billion of debt into liquidity, and that means a serious dilution of bondholder equity.

GM Inside News reports that, possibly as a move to prod bondholders, the Obama administration and the Auto Task Force will announce on Monday a deadline for GM and Chrysler to have their stakeholder agreements in order. If they have not met the terms of the loans after that new, hard deadline, they'll be put into a pre-packaged, government-backed Chapter 11 bankruptcy.

It goes on to say that if GM is placed into Chapter 11 then the government and the UAW would have the most voting power. The government's loans are asset-backed, and although the UAW VEBA obligation debt is unsecured, it forms 60% of GM's total unsecured debt. Bondholders would, in turn, get something close to bupkis, and it is hoped that the thought of "zero return" will earn more concessions.

[Source: GM Inside News]

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    • 1 Second Ago
      • 6 Years Ago
      Sounds almost like a civil war within GM.
      • 6 Years Ago
      Will this deadline be before or after the USA must declare bankrupcy thanks to Obama's grand plan to double the already insane national debt inside of 8 years while sending all our savings into hell with a massively devalued dollar while his moronic minions bow at his feet and worship his retarded butt?

      Change? Yeah, Change You Can Forget. The only thing Yes We Can do is watch the country go to hell under the dictatorship of this fool. It was bad enough under Bush but changing for the worse is not a step in the right direction.
        • 6 Years Ago
        Obama is putting on debt, yes, but it is good debt that is actually investing in the people of the country unlike Bush who pumped up the debt with a fake war costing lives and having everyone turn a blind eye to what was going on over in the financial sector on Wall St. I agree that if what he is doing does not work we are all screwed, but it we would be worse off having continued on the same path of blindness that enabled the credit crisis to develop in the first place.

        This potential plan of action stated in the article above seems like a good one if it is in fact the way they choose to go. I agree with Alex that they need to actually enforce the new deadline. The old one was setup so Bush and Co. to get out of town before the real decisions had to be made. There is no way 3 months was going to work. New team, new deadline, and a new plan.
        • 6 Years Ago
        Look just to play devils advocate here.

        When Bush was the President in the first 4 years only 1 republican, Jim Jeffords has openly questioned Bush. He was like a G-d, not a single Republican dared to question a single thing he did, weather it is war or his "fiscal discipline" or any issue for that matter. Obama is like a walking Jesus to some, but i see more opposition to him from Democrats than Bush EVER faced in the first few years.

      • 6 Years Ago
      Good to see him taking some initiative. Right now the 2 companies are just sitting in limbo, and that's not good for anyone.

      Why does Wagoner look so much like Freddy Kruger?
        • 6 Years Ago
      • 6 Years Ago
      Bindholders(Investors) take the biggest hit, UAW keeps its benefits largely intact?

      And Obama wants private investment back in the auto companines?

      How can the these companies ever recover without cutting costs and changing the business cost structure.

      GM management and labor win, investors, taxpayers lose.
        • 6 Years Ago
        What are you talking about? HEALTHCARE is the biggest cost that GM has to wrestle with outside of R&D and production operations.

        Last time I checked the UAW was not in charge of setting heathcare costs.

        Until we get National Healthcare, the domestics will never be able to compete with the Asian companies fiscally.
        • 6 Years Ago
        Technically they are bankrupt and without life support from the taxpayer they would be kaput. Amazing? Not really
        • 6 Years Ago
        "How can the these companies ever recover without cutting costs and changing the business cost structure."

        they've been cutting costs and changing their cost structure for the last 3 years. It's amazing that they're still in business. Sheez.
      • 6 Years Ago
      There is a sense of faked concern for the workers at these troubled companies. This workers are often used for political vantage points, it is a rather sad reality. The President is smart enough to know that as long as the demand for cars is out there, other smarter US auto companies will thrive and likely expand to hire a talented workforce. The vision of the CEOs of GM, Chrysler etc is to blame for their failure, no one wants to buy their cars. GM keeps touting the volt around as the cure to their rather unappealing offerings, it is like trying to cover the sun with a thumb. Truth to be told, this companies will fail with or without our money, why should we be stupider than them?
      • 6 Years Ago
      I really wish one person could show me somewhere in the US constitution, especially Articles 1 and 2 which define the legislative and executive branches, or any of the other articles...

      ... where the government has the authority to do this. The constitution isn't just a little tattered on the edges, it is ripped, torn, and run-over in a race toward central planning and consolidated power.

      Setting deadlines, managing compensation and staffing, managing products directly or indirectly, or funding operations with dollars SEIZED from taxpayers, or borrowed, or should I say STOLEN from taxpayers yet unborn.

      EVERYTHING the government is doing would be grossly illegal if it were anyone else doing it.

      "A Government is only a group of people, most notably ungoverned." -Firefly
      • 6 Years Ago
      hi Jonathan, this is a wonderful post. I think Barack is doing a pretty decent job and has taken many steps to show that he is serious about eliciting change in the Executive Office. I think that there are still a lot of challenges, and you can expect that it will not always be easy and that he will have to make many tough and unpopular decisions. People might enjoy this list of the top ten signs the president’s gig is harder than you thought: http://www.toptentopten.com/topten/signs+president+gig+is+harder+than+you+thought
      • 6 Years Ago
      Well, I hope that he holds to whatever deadline he makes for them. He needs to show the Big Three that excuses aren't going to cut it and action has to be taken.

      I wonder what's going to happen to the GM-owned subsidiaries like Suzuki. Surely that brand has some cachet with its motorcycles... will this affect them?
        • 6 Years Ago
        I do realize it's only GM and Chrysler. I misstated myself.
        • 6 Years Ago
        The Big Three?

        After all of these articles, are people still ignorant to the fact that it's only GM and Chrysler sucking up tax money?
        • 6 Years Ago
        GM divested it's remaining 3% stake in Suzuki last year.
      • 6 Years Ago
      I'll believe in one of these so-called deadlines issued by the feds the minute the automakers getting taxpayer money are actually penalized for not hitting one.
        • 6 Years Ago
        Good point, but i noticed that the date of the podcast is " Dec 9th 2008 at 5:32PM"

        At that point everyone knew that management was screwing the company, at that point GM asked for money or threatened a bankruptcy. The management has been screwing the company for at the very least 5 years.
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