Some things are never as they seem. That's especially true when talking about the bankruptcy of General Motors. From afar, it's easy to look at GM's issue being one of decades of mismanagement, poorly built cars, and a certain, too-big-to-fail mindset. But closer to the situation, as the Detroit-based company was well and truly spiraling out of control in 2009, there was much more that the public wasn't able to notice.

Forbes has a story from Jay Alix, the mastermind behind the innovative bankruptcy plan that ended up scooting GM through bankruptcy in a mere 40 days and likely saved the company from complete and utter collapse. It's in quite stark contrast to what was going on publicly, especially when it came to former CEO Rick Wagoner. Wagoner was widely criticized in his last months as CEO, but as Alix points out, the actions taken during his tenure may have well been what allowed GM to survive the courts.

It's not a short story, but it is an interesting, behind-the-scenes look at one of the biggest pieces of news of the last 10 years. Hop on over to Forbes for the entire read.


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    • 1 Second Ago
  • 58 Comments
      Scooter
      • 1 Year Ago
      If I owned a business, nobody would come save me. Run a corporation into the ground, get a free pass. Courtesy of the American tax payers.
        • 1 Year Ago
        @Scooter
        [blocked]
          brandon
          • 1 Year Ago
          How is he an idiot? Because he speaks the truth that people like you don't want to admit? He is right. They got a free pass for being f-ups. It's time to start letting these idiots find their own way out of messes they create.
        Billy Farmer
        • 1 Year Ago
        @Scooter
        lol " If I owned a business " but you don't and for what ever reason, people like you seem to forget the fact GM was too big to fail and if they had failed, not only would had GM failed but countless auto suppliers who also supplied autoparts to just about every auto manufactor here in the states and that would had hurt ford as well as any manufactor depending on auto parts for their cars made here in the states and most important all the workers who would had been jobless, but I guess you dont know that as the right wing media agenda is to not help workers, its to help the rich. I bet you never heard any outrage from those same idiots on the right wing media screaming about wall streets bail out.
          LW
          • 1 Year Ago
          @Billy Farmer
          but even with the auto parts supplier failing, it would not have been a major tragedy in america. Given that much of Clinton's initiative was to crack open the banking sectors of the world, its attempt to crack open china was a horse trading deal in which china would open their doors a bit in trade for access and control of the auto parts industry, resulting in 2 million jobs lost. Also, vulture capitalist E11iot mgmnt, which took over Delco, threatened to shut down and halt the whole GM's assembly line if it did not receive part of the auto bailout, and after it did, it still shifted its jobs to china. and you wonder why GM lives but detroit went bankrupt.
          Julius
          • 1 Year Ago
          @Billy Farmer
          @ Clipper44: WaMu and Lehman were absorbed into other companies. Noone was in a shape to buy GM, even for pennies on the dollar. That, and the fact that GM is a much bigger company in terms of footprint. Banks have assets under management, but they don't "make" anything - and so both companies had employee rolls that were a fraction of GM's. And I'd love to hear how "their assets would've been acquired and the production lines would've kept humming right along". Simply put, why would a company like Toyota continue to make GM cars? Assembly lines are very complex things - and a simple model changeover at a factory takes two-to-four weeks to complete. Changing the entire process would have been much longer - corporate structures and policies are different, manufacturing techniques are different - even the parts have differences. Heck, it took Nissan two years before Leaf production began in Tennessee (announced 2011, production in 2013) - and that's at an EXISTING Nissan plant, with money for the change provided for by the Feds. Heck, another case-in-point: the Camry's lug pattern is 5x114.3, with a 60.1mm centerbore. The current Malibu is 5x110 with a 65.1mm centerbore, so swapping these would require different machining designs.
        Billy Farmer
        • 1 Year Ago
        @Scooter
        sorry brandon but I would say judging from the rankings you and scooter are getting, your dead wrong. have a good weekend My friend
          brandon
          • 1 Year Ago
          @Billy Farmer
          Oh, so a bunch of idiots on autoblog downrank me that makes me wrong? Interesting. I guess if a bunch of idiots down rank me for saying that F=ma, then Newton is wrong too, right? This is the problem with society and democracy. They think because the mob(mostly made up of those on the right side of the bell curve, you know, less than 100 IQ) says something is right, clearly it is. I've said it before, I'll say it again. This is democracy. Just like going by ranking on a stupid comment section in a blog. The problem with democracy is it weaponizes stupidity It turns people we should simply be vaguely sympathetic toward into mortal enemies. I mean, when one stupid person wants to change the entire society for their own selfish reasons and for their own personal benefit, we call them psycho. When a million people want the exact same thing, we call it democracy.
        Making11s
        • 1 Year Ago
        @Scooter
        If you owned a business as large and important to the economy as GM, you would have. See: GM bailout.
      • 1 Year Ago
      [blocked]
      robracerx
      • 1 Year Ago
      gee thanks for saving the worst automotive company in the world!
        • 1 Year Ago
        @robracerx
        [blocked]
          • 1 Year Ago
          [blocked]
      Levine Levine
      • 1 Year Ago
      The real architects, or correctly identified as crooks, who bailed out GM were the corrupt politicians acting on the behalf of the UAW and other labor unions. GM should not have been "saved" with taxpayer money. No poorly managed private business deserves to be bailout with public money. As a result of the public bailout, today, the American taxpayers have lost $8billion as the result of "saving" GM. Meanwhile, top GM executives, especially the inept ones, continue to haul in 7-digit salaries courtesy of the public trough. This is in contrast to the millions of low-wage working-stiffs who are forced to pay burdensome taxes to the government that in turn distributes the revenue to the Too-Big-Too-Fail corporations and WallSt FatCats. Under real Capitalism, a private business is not allowed to socialized losses while keeping the profits. The American government's bailing out GM, AIG, BearStearn, Fannie/Freddie, etc., exposes the truth about America's economic system: USA is fascist state operated for the benefit of Big corporations.
        Julius
        • 1 Year Ago
        @Levine Levine
        While in principle, I agree - the problem is this: The US GDP in 2008 was $12.88 Trillion dollars. The assets of the two largest banks that were bailed out alone was worth a quarter of that - JP Morgan Chase ($2.3 Trillion) and Bank of America ($2.1 Trillion). The assets of the banks that failed (Bear Sterns, Washington Mutual, etc.) were sold for pennies on the dollar. Thus, there was a real possibility of a MAJOR implosion to US productivity and value if the US let these large corporations fail. That said, I'd argue that the leaders of these companies that guided them into the ground should at least have served time in compensation for US money. So the reality is that
        thecommentator2013
        • 1 Year Ago
        @Levine Levine
        Well, I got news for you. You're not in a real capitalist country anymore.
      Dano
      • 1 Year Ago
      General Motors will not be saved until they pay back the net loss from stock purchased for their bailout. The taxpayers are footing that bill. At the moment it is up to 9.7B http://www.usatoday.com/story/money/cars/2013/10/29/treasury-taxpayers-tarp-general-motors-loss/3295777/
        Dave
        • 1 Year Ago
        @Dano
        Yeah.. and the house and senate owe us 25 billion for the shutdown. They won't be saved till they pay us back too...
        Walt
        • 1 Year Ago
        @Dano
        Where does one get in line to get paid back for losses on common stock? The government took an equity investment in General Motors in the form of common stock. There is no payback with common stock outside of dividends, if any. Your only hope is the shares will rise in value and you'll be able to sell them for more than the price you paid for them. Who set the the initial public offering price for GM common stock? That would have been investment bankers and those running GM at the time, which would have been the government. Setting an unrealistic high price for the initial public offering is why the shares the government holds are less than the initial offering price. In other words, our government did a dumb deal, and we all get to pick up the tab. That's not GM's fault. It's time to put the blame squarely where it belongs - government ineptness.
      thecommentator2013
      • 1 Year Ago
      GM would have survived, some way or the other. This Bail-out-story reads well, it might even be appropriate in short and middle term. But, if bail-outs are such a good idea, why doesn't washington bail-out all companies if necessary? Most likely not that a good idea. GM wouldn't have gone south, they'd be regrouped under new management, had kept producing cars of some sort. Long term effects indicate that tax payers won't see any relief on their purses. Just sayin'
        Julius
        • 1 Year Ago
        @thecommentator2013
        This was a Washington bail-out specifically because GM had bad timing. All of the banks that could have provided capital at the time of the filing were themselves getting bailed out. If GM had the foresight to do it years earlier like Ford did, then this wouldn't have been an issue.
      delsolo1
      • 1 Year Ago
      Doesn't all the credit go to Romney , the self proclaimed savior of the American auto industry.
      AntBee
      • 1 Year Ago
      I wish I could unread that article. It seemed as if it were written as a 10th grade book report.
        Michael
        • 1 Year Ago
        @AntBee
        I've seen middle schoolers write better essays than what I just read.
      Clipper44
      • 1 Year Ago
      It wasn't a 'real' bankrupcy. GM received 10's of billions of dollars of tax-payer money to buy GM. The government guaranteed money saved GM from total collapse, not some phony bankruptcy plan.
        Will
        • 1 Year Ago
        @Clipper44
        They needed financing to get through the bankruptcy. They needed this financing anytime when the banks were lending money to anyone and the financial markets were frozen. If it wasn't for the financial crisis GM would still be sputtering along without ever meeting the bankruptcy in the first place. However having been through the bankruptcy the new GM is much stronger company for it. Ford getva lot of credit for not having taken government funds when in reality their Management just had the iforesight to hock everything in the company including the logo right before the financial markets froze up.
          brandon
          • 1 Year Ago
          @Will
          That's because Mullany is a great manager. GM is full of f-ups. Even still.
          Levine Levine
          • 1 Year Ago
          @Will
          Will, you got it backward. GM couldn't get re-financing and therefore went bankrupt. GM was so badly managed that creditors refused to loan GM more money. Then GM went to Congress for taxpayer money. GM was not the victim of the financial crisis - it was also a player. Not all big corporations suffered or collapsed during the financial crisis.
      CoolWaters
      • 1 Year Ago
      You linked to "Forbes", business fiction.
      Kevin Potts
      • 1 Year Ago
      GM has been saved? Not from where I can see. They are in no better shape than they were 13 years ago.
      orchestral.whips
      • 1 Year Ago
      What is with this pervasive fairytale that General Motors was ever saved from the brink of disaster by some sort of financial wizardry? Sorry, that company is long gone, just ask any of the bag-holders left holding converted Liquidation Motors bonds or shares, or anyone who worked at a Pontiac or Saturn dealership, or anyone who used to work at one of many lower-tier parts suppliers whose jobs all went to Mexico or China as part of the restructuring deal. Yes, the victors DO get to write the history books, but truth be told, what our government did to these people makes Chavez's takeover of Venezuelan oil rigs look like a game of playground tiddlywinks.
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