• Apr 13th 2009 at 12:41AM
  • 51
According to a lengthy report by the New York Times, the Treasury Department is directing General Motors to begin work on a bankruptcy filing by June 1. Based on sources close to the talks who were unable to officially discuss the process, the report outlines the "fast 'surgical' bankruptcy" of the automaker if GM is unable to reach an agreement with the UAW and bondholders to exchange some $28 billion in debt into equity in the automaker.
The plan, which needs to address every aspect of the company, aims to make the bankruptcy filing as quick and painless as possible so the General can avoid tarnishing its already damaged image and stem the sales slide experienced over the last six months. One consideration is to break up GM into two separate entities after the filing, which would bundle and separate the automaker's good and bad assets. The positive portions of the automaker would "enter and exit bankruptcy protection in as little as two weeks, using $5 billion to $7 billion in federal financing." The bad bits, including lackluster brands (Hummer, Pontiac, Saab and Saturn), bloated dealer networks, extra manufacturing capacity and health care obligations would be left in the "old" GM and liquidated over the course of several years.

President Obama's automotive task force has been in close contact with GM officials over the last week and those talks will continue into this week. And in an about-face from the Wagoner administration, GM's new CEO, Fritz Henderson, has begun to indicate that bankruptcy is a strong possibility, going so far as saying during a Canadian Broadcasting Corporation interview, "If we need to resort to bankruptcy, we have to do it quickly."

[Source: NYT | Image: Bill Pugliano/Getty]

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    • 1 Second Ago
      • 6 Years Ago
      I don't get why they continue to keep GMC on board when EVERY vehicle in the GMC lineup is redundant with something in the Chevrolet lineup. Kill it already!
        • 6 Years Ago
        I'd rather see GMC continue to sell commercial trucks and not sell SUVs to consumers. I don't see the purpose of Chevrolet-branded medium duty trucks and cargo vans. On the hand, there is badge-engineering in the medium and heavy duty truck markets outside of GM as well, so it may be justified for dealer coverage purposes in rural areas.
        • 6 Years Ago
        I think GMC should actually go 'professional grade' and only handle medium-duty applications (i.e. TopKick/Kodiak) and chassis-cab configurations for commercial purposes.

        Leave the CUVs, SUVs, and pickups to Chevrolet.

        Besides, the Terrain looks terrible, anyway.
        • 6 Years Ago
        you have a good point there.
        I think let one die and the other two survive.
        • 6 Years Ago
        Supposedly GMC is a big seller with commercial trucks. But like you said, even those trucks are also sold as Chevys. I don't see why a person/company wouldn't buy a truck just because it's badged as a Chevy and not a GMC.
        • 6 Years Ago
        Actually, I'd say that Chevy should go CUV-only and leave the body-on-frame SUVs and trucks to GMC. Kill the Tahoe, Suburban, and Silverado. Kill the Acadia and Terrain too, while you're at it.

        That'd provide some distinction, it would enhance GMC's "professional grade" image, and it would reflect how families are shifting away from SUVs and toward CUVs.
        • 6 Years Ago
        Because GMC actually makes money of the big SUV and Pickups they sell.
      • 6 Years Ago
      Fiaero obviously you are a Ditto head and use Rush as a primary information source. You comments lead me to think you don't think, for yourself, then you end with a racist comment to just confirm it.

      GM is not deciding to go into bankruptcy the government, wisely, is all but forcing them into it because it is the only way they can truly turn things around and not just keep coming back for more

      One of the stated reasons the Auto Task Force is giving for pushing Bankruptcy is the fact is insufficient concessions by the Unions to allow GM to be an ongoing concern. That does not sound like the Union coming out smelling like a rose to me.

      Then you finish with a Blatantly Racist comment, "since they have the H. N. I. C. backing them all the way". Some others here may not know what "H.N.I.C" (Head N- - GER In Charge) stands for, though I doubt it, but I grew and in the South in a town and a family full of Racist so it will not slip by me. Funny most of them always wanted to blame others for their lot in life instead of themselves. Thank God I left that town and got a Brain for myself.
      • 6 Years Ago
      The real reason all of these American car companies are hurting so bad is because of these bloated and greedy unions and all of the money they are paying out to people who haven't worked for them in decades. This drives the price up on the American cars who are already struggling to compete in the world market because of their fuel efficiency and quality.

      Nice, objective analysis there, chief. It gives one the impression that you're the speechwriter for GM's Board of Directors.

      Let me show you what an objective analysis looks like:

      The reason GM is in their current predicament is a perfect storm of greedy unions, greedy corporate execs, and clueless, MBA-driven middle management bean counters, who combined - have the short-sighted vision of Mister Magoo - too short-sighted (in fact) to make the fundamental changes that will allow them to remain competitive with their foreign competition.

      Any one with common sense will realize that it takes two (in this case more than two) to tango GM towards bankruptcy
      • 6 Years Ago
      I hope this surgery can remove the tumour that is their "legendary" interior quality. And doc, please don't remove the Vettes and Vs and SSs by mistake, that would be a tragedy.

      This plan makes a great deal of sense, and I really hope this will be the end of the problems at GM and for American taxpayers.
      • 6 Years Ago
      There has never been a car company ever come out of bankrupsy in history......................never in history.......................
      • 6 Years Ago
      Yet AIG is still sucking the blood of taxpayers.
      • 6 Years Ago
      @Zillon: I was thinking the same, why the hell keep the GMC brand and spend money on ads when Chevrolet makes the same products?

      @iQuack: Without government help, GM would have run out of money in mid-December 2008 and all bonds, equity and stock would have been vaporized with little chance of resuscitating. Now at least GM is going into surgical bankruptcy, giving a chance to what's left to prosper.

      • 6 Years Ago
      Just curious if anybody know how they can package "the dealer network" with the bad bits of GM to be liquidated? Obviously they can't sell dealers they don't own, so do they simply mean that the it will provide GM the chance to pare down their dealer network as they see fit with less restrictions from State dealership law?
      • 6 Years Ago
      Thanks to us (taxpayers) bond holders best interest is for GM to go bankrupt. Most CDS (credit default swaps) are backed by AIG (thanks congress!). Debt reduction means bond holders get less money. The govt said that they would back all CDS from AIG. GM going bankrupt gets bond holders 100% of their money... Wall street F U!!!!!
      • 6 Years Ago
      GM doesn't understand that American's won't buy Buicks. It's over! Buick is dead. So is Pontiac. If GM invested in Saab and gave it real competitors to Volvo/MINI/VW it would have succeeded. imo, there is a market for premium compacts. But no; the 9-5 marches on. Instead of pushing Pontiac and Buick on the market, they should have listened to their customers.

      The truth is, a lot of people go into the car buying process ruling out American cars. its sad, but its true. and since people don't want to buy American cars, Opel should replace Saturn. saturn used to be an american vw. but, like saab, gm ruined it by dumbing down the quality. Why else? the Saturn badge makes the Astra and sky look uglier than their Euro cousins, and everyone knows it.

      You could even have Saab/Opel dealerships.
      What? Ford had Aston/Jag/LR in the 90's.
        • 6 Years Ago
        I think Buick *could* be salvaged, although it would have to take a different place than it has now (not that it has much anyways). Chevy could aim for more youthful buyers with the Cobalt/Cruze, Aveo (hopefully seriously redesigned), and Spark much like Scion, and then Buick could basically be their Toyota-esque brand (after all, Toyota buyers have a pretty high average age much like Buick).

        Offer them in the same dealerships, and slowly diverge the product lines so that Buick has all the larger and more luxurious vehicles, and then leave Cadillac as the luxury brand and GM would be good to go. Hopefully this will let them charge more for the higher trims too.
        • 6 Years Ago
        Buick isn't supposed to compete with Toyota, Chevy is. It comes down to brand image. Even Mercury appeals very strongly to women. GMC appeals to............ the people who would deflect to ford if it didn't exist. Buick appeals to very old people, a shrinking part of an already small market. It should have gone out back with Oldsmobile.
        • 6 Years Ago
        People would buy Buicks... If GM wouldn't continue to make tacky pieces of crap and slap that badge on it... It's like Buick is for all the reject designs that they think could have a chance in the world.
        • 6 Years Ago
        Why is it sad that most people don't consider American cars when shopping? Most of us get exposed to the latest American cars when renting at Airports and the not shopping for American cars begins right there. How many of you have been stuck behind the wheel of a LaCrosse or Lucernce and start wondering to yourself, wow I didn't know they still made cars that drive like boats, and that's not a compliment. Ever sit in the back seats? Plenty of room but I guess they never thought of asking themselves if it was comfortable to sit there. Rubberized buttons on all the controls (my God why can't GM even make good looking and high quality buttons.) Every GM I have gotten seems to have the interior quality of a Sears tractor.
      • 6 Years Ago
      Poor GM
      • 6 Years Ago
      all that bailout money so they can file for bankruptcy, that's brilliant, absolutely brilliant. This is CHANGE alright. Economists in White House really need to go back to college.
        • 6 Years Ago
        I think that is the problem.
        Rick Wagoner, Fritz Henderson and even Barack Hussein Obama are all Harvard graduates.
        • 6 Years Ago
        A bankruptcy now is a significantly different prospect than 5-6 months ago when a Chapter 11 would have more likely resulted in a chapter 7.

        They now how has half a year to prepare.

        The customer impact is much less. GM has partly taken its hit with the public already. But at the other end, the public has been desensitized to the idea. So the effect on customers will be less dramatic. The Government is no backing the warranties. So the negative impact on customers will be much less.

        And the take payers would have been on the hook for the bondholders and all those Pensions in any form of bankruptcy anyway. So it was worth exploring a non-bankruptcy route where the taxpayers may have been paid back instead.
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