REPORT: GM to declare bankruptcy before markets open, chief restructuring officer named
General Motors' bankruptcy endgame appears to be at hand, with word coming out that the automaker will indeed file for Chapter 11 protection early on Monday morning, which in turn is expected to trigger $30.1 billion in U.S. government loans. That funding will arrive on the heels of the $19.4 billion GM has already received since late last year, and Canada is expected to chip in an additional $9.5 billion. In exchange for that $30.1 billion in financing, Capitol Hill will receive a 60% share of GM, while Canada's investment will reportedly net it a 12% stake.
In related news, Automotive News is reporting that GM will appoint Al Koch to a newly created chief restructuring officer post. Koch, a corporate turnaround expert, has already been working with GM since January through his advisory firm, AlixPartners LLP. According to AN, Koch will oversee "bad" GM – that is, the liquidation of assets deemed to be dead weight in the drive to a leaner, more competitive GM (think: Hummer, Saturn, Saab, etc.). Recently minted GM CEO, Fritz Henderson, will continue to lead the corporation and, of course, all warranties will continue to be honored.
As part of the Chapter 11 bankruptcy proceedings, GM will see its stock-trading ticker removed from the Dow and S&P 500 on Monday, with those who have still been stubbornly holding on to stocks effectively losing everything.
President Obama will address the nation on GM's historic bankruptcy beginning at 11:55 a.m. EDT, with Fritz Henderson slated to address media members at around 12:15 p.m. in New York.
[Source: Automotive News - subs. req. | Image: Bill Pugliano/Getty]
Reader Comments (Page 1 of 4)
DS 11:39PM (5/31/2009)
=(
Reply
TyWright 3:26AM (6/01/2009)
Government Motors.
Detroit RIP...
Sea Urchin 6:35AM (6/01/2009)
Once again Obama puts himself front and center, of course that will lead to a huge coverage by press and in return to a steep decline in sales.
Fritz needs to have some balls and to tell Obama to back off, the latter wants to do anything to kill media coverage of some of the rulings of his supreme court nominee and of Nensi Pelosi.
C.W. 8:31AM (6/01/2009)
sea urchin is right on.
although the media will gobble up ANYTHING to do with doom and gloom... bloodshed... historic bankruptcy... etc... they thrive on the suffering of others.
i know it would never happen, but if this could just happen behind closed doors, everyone would be better off. Obama thinks he can give a speech for any issue and that everything will all just be better. please. the last thing i want to hear today is something from a man who knows nothing about this industry and will never feel the true impact.
Mr.Oak 8:46AM (6/01/2009)
Idiot ALERT!!! Idiot ALERT!!!
Urchin, all it takes is COMMON SENSE.
Would you own 60% of anything and not have a say as to general direction of how it is managed?
Luckily for Fritz he is not as stupid as you. Thank you Mr. Obama, for saving our ass, now get out. That is NOT going to happen.
The Obama administration did not go to Wall St. knocking on doors , looking for companies to nationalize. Wall St. went to the administration looking to be saved from themselves.
We arrive at this juncture in history, not because of the actions of the US government (GOP or DEM), but because of the actions of a handful in shylocks in the business world.
Big business to Americans: Sure we sodomized and savaged you, but that is in the past. TRUST us, we won't do it again.
Government to Big Business: Yes you did, and no, you will NEVER again be trusted. There will be new rules on how this "GAME" is played going forward.
I don't know about the rest of you, but I EXPECT my government to act on behalf of the people.
Classic example of the government protecting the people from the WOLVES:
I have two credit cards. One personal, and for the operation of my consulting business. On my personal credit card, I maintain a near zero balance. On my business card, which was 6%, then 11.5% and suddenly 29.6% without any notice. even though I pay my bill on time. Last year, my consulting contract ended, I was out of work for about 5 months. I continued to pay my bill, but the interest on the $10,000.00 balance @ 29.6%, quickly pushed the balance through the roof.
Thank you government (Obama administration + congress) for reigning in these LOAN SHARKS.
Sea Urchin 9:02AM (6/01/2009)
"The Obama administration did not go to Wall St. knocking on doors , looking for companies to nationalize. Wall St. went to the administration looking to be saved from themselves.
We arrive at this juncture in history, not because of the actions of the US government (GOP or DEM), but because of the actions of a handful in shylocks in the business world."------------------------Could not agree more on this.
Look Obama may have the interest of people at heart but come on, everyone knows that every step Obama takes will be all over the news.
If GM said OK we will enter BK that would have been front news for the day, but come tomorrow news coverage would end, when Obama starts talking for a company in which a government is a "blind" investor, that changes everything. The media is in love with him and since he will once again give a speech this will stay on the news for days, which will directly result in reduction of sales. Something that will hurt the company=taxpayers.
As far as the loan sharks go, no one owes you anything, you are smart enough of a person to know how credit cards work. Obama basically once again told private industry (not all credit card companies were bailed out) how to run their business. That is not the capitalistic way. If you do not like the way credit cards work find an alternative way to finance your business.
Also as I said earlier, I am sure you know this very well but Sonya Sotomayor has made some serious remarks in the past that was #1 news item on all Sunday political shows, as reporters start uncovering her record more and more controversy would come out, Obama wants to do anything for public not to pay attention to some of her past rulings.
The media swallows everything Obama throws at them.
BoxerFanatic 11:46PM (5/31/2009)
Bad GM = private enterprise General Motors.
remaining: Government Motors.
Waste 20B$, fine. We'll write that off, and kick in another 30B$, and take government ownership.
The Tax payers are just slaves that can be worked harder for the value to be seized... This, that, the other thing. Seize more money, and de-value the rest.
All the belly-aching about GM going under 6 months ago, and how devastating it would be...
Well now, 50B$ later, and under government control, it could be monumentally more devastating to people who otherwise had no connection to the auto industry whatsoever... except being potential customers.
Customers that soon won't be able to buy the products, due to heavier taxation, and deflated dollars. Not that the government-built neo-trabants will be worth buying, anyway, even if the principles of freedom don't mean enough to people to boycott Government Motors altogether anyway.
As goes GM, so goes the country... It isn't just for success anymore.
Reply
zamafir 11:57PM (5/31/2009)
normally we disagree but you're spot on here.
WetheSheeple 3:13AM (6/01/2009)
Agree. The sad thing is most people blame the Repubs or Dems for the devaluation of our dollar. It is in fact the banksters who are largely responsible. Our government gives the power to a private banking cartel to issue is paper fiat currency and it's backed only by the faith of the United States. They can print as many Federal Reserve Notes as they want and 'monetize' gov't debt with this special privilege they have. The transfer of weath that has taken place in this country is astronmomical, yet people blame it on either party.
The reason things are happening so quickly,like the fall of GM and Chrysler is the elite are making their move. They have totally bankrupted this nation a long time ago. Now we are moving into a full-blown police state and at the same time we are all becoming economic serfs to these people. We will soon have a new currency once the dollar totally collapses. Mark my words on that.
I for one will not buy a GM car built in China or Russia and sold over here. I'm afraid that once the government has taken over GM, they are done.
Good thing we still have Ford!
PJ 4:38AM (6/01/2009)
I agree as well, though I'm coming from the other side of the political fence. I wish GM had had the stones to make the tough decisions (plant closings, contracts) themselves--or file C11 and let a new owner do it once the writing was on the wall--instead of running to the government with their hands out. An appalling amount of tax dollars have now been pumped into this sinking ship.
That said, I'm not seeing why Washington, as GM's new "owners," shouldn't reserve the right to management decisions. The government, Magna, Daimler, the Easter Bunny--whoever bailed or bought out GM would have started pulling the strings, management-wise, once they owned them to turn them around. The government just happened to be the "buyer" GM fled to, whining all the way--this, despite their historical cries "foul" and digging in of heels every time new regulations were introduced.
Either way, though, I think the good news is that GM won't remain "Government Motors" for more than a few months. Chrysler will have entered and exited bankruptcy in a matter of weeks, emerging (shortly) as an arm of Fiat. While GM may not have such a deal in the works (Chrysler had been in talks with Fiat since April 2008), their global rivals aren't going to let all of that infrastructure and manufacturing capacity go to waste. Look for a privately-owned "new GM" to emerge by the end of this year, at the latest.
James 4:47PM (6/01/2009)
@WetheSheeple,
In reality, the Dem & Repub (Neo-Conservatives) duopoly/"two-sides-of-one-coin" politicos are but pawns and answerable only to the Moneymasters/Banksters (who actually runs the world)...and not to us the People, the "Great Unwashed".
As long as pols continue to make empty promises just to get elected by the ballot, they'll keep following the real "powers that be"...
MoeJoe 11:47PM (5/31/2009)
Isn't Canada losing tons of production? Why are we chipping in so much?
Reply
zamafir 11:55PM (5/31/2009)
jobs.
Homeboy 1:45AM (6/01/2009)
Like the previous guy stated the purpose of chipping in is jobs. Some of you guys are moaning completely unaware of what a favor the government is doing by bailing out GM. Tax money is being put to good use here because the cost of letting GM fall is greater than what we can image. I've ones worked for a car manufacturer two years ago and gained some considerable knowledge of how the industry is structured and operates.
Assembly line workers are only the tip of the iceberg. Multiply the number of GM employees by 3-4 and you'll get an idea of how many people are involved in making a GMC truck become a reality. GM falling would lead to a domino effect that would trickle the fall of hundreds of other suppliers, consultants, co-ventures and partnerships. Panic and several millions of people loosing their jobs will be the result if the government would have stood by and let one of the backbones of US economy collapse. Obama is just doing what has to be done and he's not to be held responsible for this. GM has been a sinking ship long before Obama even thought about running for president.
Seminole 11:53PM (5/31/2009)
And so it begins...
Reply
Frank 10:51AM (6/01/2009)
Props to you for the Babylon 5 quote.
Justin 12:02AM (6/01/2009)
This is real change.
Unfortunately the unions had Obama's help to steal 100 billion + of tax payer's money.
Reply
James 12:42AM (6/01/2009)
Change..what change are you talking about?
Bush or Obama...Dems or GOP (Neo-Con faction) in power makes no difference really when it comes to bailouts going left or right, banks or automakers...
The taxpayers....We The People gets screwed either way.
Jeff Johnson 12:05AM (6/01/2009)
hmmm maybe it's just my B.S in economics talking, but I could have saved the United States tax payes a few billion by telling GM to stuff it and declare bankruptcy 6+ months ago.
too big to fail? the only thing bigger than GM is the American people's stupidity for voting in the washington assholes who dole out our money like it was candy.
Reply
jsjs 3:02AM (6/01/2009)
Uhh, if we are talking Ch.11 reorganization bankruptcy, the govt. would still have had to put in billions to keep the "slimmed down" GM functioning as a going concern even if bankruptcy proceedings had started months ago.
The past few months was used to renegotiate terms w/ the UAW, creditors, etc., as well as to see how things panned out w/ Chrysler (there's a reason why Chrysler's bankruptcy was scheduled a month earlier).
If GM had gone into liquidation, we would have seen our economy go from a deep recession to a depression.
I certainly don't like seeing my taxdollars used to bailout all these mismanaged companies (esp. the greedy banks/insurance companies), but not doing so would have resulted in an even worse economic meltdown.