Rumormill: Obama will set a deadline for GM and Chrysler to address issues or enter Chapter 11
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]
_opt_thumbnail.jpg)
_thumbnail.jpg "2011 Audi A8: Live from Miami")
Reader Comments (Page 1 of 2)
Taglane 2:51PM (3/29/2009)
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?
Reply
inteller 8:23PM (3/29/2009)
NEW CAPTION PIC!
The Luigiian 2:58PM (3/29/2009)
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?
Reply
Ed 3:00PM (3/29/2009)
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?
Jake B 3:13PM (3/29/2009)
GM divested it's remaining 3% stake in Suzuki last year.
Sektor 3:30PM (3/29/2009)
Big 3 is shorter than "GM and Chrysler."
The Luigiian 3:34PM (3/29/2009)
I do realize it's only GM and Chrysler. I misstated myself.
Alex Nunez 3:02PM (3/29/2009)
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.
Reply
Sea Urchin 3:12PM (3/29/2009)
Now hold on there a second buddy. Why don't you reveal yourself, how dare you impersonate Alex Nunez?
Nunez works for Autoblog and last time i checked Autoblog was OK with GMs management and decision making process in general and utterly refused to question moves Wagoner, Lutz and Fritz implemented..........................even thou the company has been losing billions for about a decade now.
But to cover all the bases, just in case you ARE Alex Nunez....buddy, it's too late to voice your outrage now, when you should have been dong just the same all along.
Alex Nunez 3:30PM (3/29/2009)
Oh, BS. My opinions are my own, and I don't apologize for them. I'm on the record with my thoughts on this dating back to December: http://www.autoblog.com/2008/12/09/autoblog-podcast-106/
Sea Urchin 3:36PM (3/29/2009)
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.
Smegley 3:14PM (3/29/2009)
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.
Reply
Sea Urchin 3:22PM (3/29/2009)
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.
J.Crew 4:09PM (3/29/2009)
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.
Jake B 3:14PM (3/29/2009)
Sea Urchin I just downvote whenever I see your name at this point.
Reply
Sea Urchin 3:18PM (3/29/2009)
I knew someone was doing that.
Sektor 3:30PM (3/29/2009)
LOL.
Assass1n 3:52PM (3/29/2009)
Yeah, him and vintage- wherever he went- maybe its the same guy
Tim 3:41PM (3/29/2009)
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.
Reply
superset5 3:52PM (3/29/2009)
"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.