- Mar 29, 2009
Rumormill: Obama will set a deadline for GM and Chrysler to address issues or enter Chapter 11
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]