Autoblog

Dealers trying to push Saab NA into bankruptcy

Jonathon Ramsey — Tue, 31 Jan 2012 14:31:00 EST

Filed under: Government/Legal, Saab, Earnings/Financials

Saab North America acknowledged that the chances were exceptionally slim, but it hoped to avoid bankruptcy long enough to give another company a chance to buy it. Shortly after Saab NA appointed a third-party administrator, McTevia & Associates, it was decided there was no way to save the company short of liquidation, and on January 23, the administrator announced plans to file for Chapter 7 bankruptcy.

But Saab NA was beat to the filing by a group of 162 out of the 188 Saab dealers, who filed for involuntary Chapter 11 bankruptcy in Delaware. The dealers said last week they were going to file for Chapter 7, but instead chose Chapter 11 because of its lower costs and in case China's Youngman or Turkey's Brightwell Holding's bid for Saab NA's parent succeeds and they want to restart operations here. The document was filed in Delaware because the dealer body feels they'll get better hearing "further away from Detroit." Dealers also wanted the force of court orders to back up any decisions made, not that of a third-party administrator.

Underneath all the legal machinations, though, if estimates from Saab NA dealer attorney Leonard Bellavia are accurate, then the parties could emerge without getting financially kneecapped. When McTevia announced its plan to file, Bellavia suggested that Saab NA's liabilities were $10.5 million and assets at between $75 million and $125 million. With no more parts on the way and 2,400 cars on lots, McTevia had earlier said that the parts distribution business is "the only meaningful asset."

Dealers trying to push Saab NA into bankruptcy originally appeared on Autoblog on Tue, 31 Jan 2012 14:31:00 EST. Please see our terms for use of feeds.

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Report: UAW files suit against GM over $450M Delphi debt

Zach Bowman — Wed, 07 Apr 2010 13:32:00 EST

Filed under: Government/Legal, Plants/Manufacturing, GM, Earnings/Financials, UAW/Unions

Once again, General Motors has found itself in hot water with the United Auto Workers. Way back when in 2007, GM signed a deal with Delphi to provide a total of $450 million for the UAW's Voluntary Employee Beneficiary - a trust set up to provide for retiree benefits, especially health care. So far, GM hasn't been willing to hand over the dough, and the UAW has decided to take The General to court over the issue.

The Detroit Free Press is reporting that the lawsuit claims GM denied the UAW its cash when the union asked for it last November and has refused to make payments ever since. As part of the automaker's bankruptcy filings last year, the company assumed all of its contracts with the UAW, including this one.

Delphi has been feeling the pinch of the economic slowdown in a big way, and found itself in bankruptcy court in 2005. When that happened, the company asked for concessions from the UAW, and managed to negotiate a pay cut of up to $10 per hour as part of the deal. GM has since snapped up four Delphi divisions during 2009, and word has it the automaker is seeking even further concessions from the union.

So far, GM hasn't said word one about the lawsuit.

[Source: Detroit Free Press]

Report: UAW files suit against GM over $450M Delphi debt originally appeared on Autoblog on Wed, 07 Apr 2010 13:32:00 EST. Please see our terms for use of feeds.

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REPORT: New GM entitled to $16 billion in federal tax breaks courtesy of Old GM

Jonathon Ramsey — Tue, 04 Aug 2009 08:27:00 EST

Filed under: Government/Legal, GM, Earnings/Financials

Due to what appears to be a slight (additional) bending of the rules, the "new," post-bankruptcy General Motors has been allowed to carry the $16 billion net operating loss that was created by the "old" GM. That means that New GM will not have to pay taxes on its profits for a while, because the profits can be written off by the losses.

The issue is that the move, called a "tax-loss carry forward," isn't supposed to be available to the automaker. The tax code contains provisions that prohibit a profitable company from buying an unprofitable company for the sole purpose of claiming the unprofitable company's tax losses - and the type of bankruptcy GM went through should have precluded The General's ability to use the tax loss practice.

Except for the fact that GM was bought by the government, and since the government writes the tax code and collects said taxes, it can decide how it wants to handle the companies it owns. General Motors says the move will bolster its "cash position to the benefit of all parties." Critics, on the other hand, say that GM got a $16 billion unfair head start on Ford. Hat tip to Adrian.

[Source: The Wall Street Journal | Image: Jim Watson/AFP/Getty]

REPORT: New GM entitled to $16 billion in federal tax breaks courtesy of Old GM originally appeared on Autoblog on Tue, 04 Aug 2009 08:27:00 EST. Please see our terms for use of feeds.

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BREAKING: New GM drives out of bankruptcy this morning [*UPDATED]

Chris Shunk — Fri, 10 Jul 2009 08:50:00 EST

Filed under: Government/Legal, GM, Earnings/Financials

After a scant six weeks in bankruptcy court, General Motors is on its way out of Chapter 11. U.S. Bankruptcy Court Judge Robert Gerber approved the sale of GM's good assets to a new company lead by the U.S. and Canadian governments and the UAW healthcare fund, but gave vested parties four days to file an objection.

After two requests for a stay were denied on Tuesday and an accident victim's request was denied at the last minute on Thursday, all signs point to an exit from bankruptcy within a few days, and this morning, word from the Detroit News is that the company officially emerged from Chapter 11 at 6:30am this morning. CEO Fritz Henderson has called a 9 am press conference this morning, and one can only assume that he will declare the birth of "New GM."

GM has received $50 billion from the US government to keep the mega-corporation out of liquidation. For its troubles, Uncle Sam will receive a 60% stake in the new company. Canada, which pitched in $9 billion, will be 11.7% owners, while the UAW will receive 17.6%. Old GM will receive 10% of the new company to help creditors recoup some money. The "New GM" will be smaller in almost every way, with four fewer brands, a smaller presence in Europe, fewer employees, and a markedly more attractive balance sheet.

[Sources: The Detroit News; AFP | Image Source: Bill Pugliano/Getty]

*UPDATE: Official press verbiage added after the jump, click here to watch GM's live 9am press conference.

Continue reading BREAKING: New GM drives out of bankruptcy this morning [*UPDATED]

BREAKING: New GM drives out of bankruptcy this morning [*UPDATED] originally appeared on Autoblog on Fri, 10 Jul 2009 08:50:00 EST. Please see our terms for use of feeds.

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REPORT: Federal bankruptcy court expected to rule on "New GM"

Chris Paukert — Tue, 30 Jun 2009 10:57:00 EST

Filed under: Government/Legal, GM, Earnings/Financials

According to Reuters, General Motors is on its way into bankruptcy court today in an effort to win approval and access to additional federal funding under its asset-split plan. The automaker filed for Chapter 11 protection just 30 days ago, but it will now go before Judge Robert Gerber to sell desirable assets (think: Chevrolet, Cadillac, GMC, Buick) to "New GM" and jettison various debts and negative assets by consigning them to "Old GM," which would be liquidated. If it succeeds in winning court approval, GM will receive billions in U.S. Treasury funding.

Before it can open the Fed's piggy bank, however, GM must weather challenges from bondholders and disgruntled consumers involved in certain types of product liability lawsuits. Industry watchdogs believe that both GM and the Obama administrations auto task force have learned from Chrysler's bankruptcy machinations, which could accelerate the process. For more details on today's proceedings, check out the link below. Thanks for the tip, Michael!

[Source: Reuters via Yahoo | Image: Michael Heiman/Getty]

REPORT: Federal bankruptcy court expected to rule on "New GM" originally appeared on Autoblog on Tue, 30 Jun 2009 10:57:00 EST. Please see our terms for use of feeds.

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Bankruptcy filing reportedly allows GM, Chrysler to shed hundreds of product liability lawsuits

Chris Shunk — Mon, 22 Jun 2009 14:27:00 EST

Filed under: Government/Legal, Chrysler, GM

Outside of bankruptcy, General Motors and Chrysler were no longer competitive enough to remain solvent. After Chapter 11 reorganization, the two automakers will have a clean financial statement and a whole lot fewer employees, plants, and dealers. Another area where the two automakers will receive a clean bill of health is product liability lawsuits, and the savings will be huge, The Detroit News reports. GM, for example, had $928 million in liability expenses (including court costs and lawyer fees) in 2008 and $1.1 billion in 2007.

The government has ruled that the new GM and Chrysler will not be held liable for vehicles sold by the old GM and Chrysler. Lawyers are still debating whether or not cars and trucks purchased after bankruptcy proceedings began will be covered, but anything before bankruptcy is apparently out of the picture. University of Michigan law professor and bankruptcy scholar John Pottow told the DetNews that GM lawyers gave him the impression that it was the government that was driving this issue:

"What's fascinating about this is that it is the government taking the hard line here, insisting that the new company should emerge free of those liabilities. It's the government actually thinking like hardheaded investors instead of taking the more predictable, more socialist line."

While the two companies' ledgers will look better without the threat of liability, the move is brutal for those who are awaiting trial or have already been awarded money but have yet to receive any funds. Those who have been permanently disabled as a result of alleged vehicle defects will now likely never receive a dime for their injuries. While pre-bankruptcy liabilities will be swept under the rug, GM and Chrysler will continue to cover all applicable warranties both pre- and post-bankruptcy.

In the meantime, attorneys general from a number of states aren't taking the matter lying down - eight separate states have filed objections to the provision in federal bankruptcy court on Friday.

[Source: The Detroit News]

Bankruptcy filing reportedly allows GM, Chrysler to shed hundreds of product liability lawsuits originally appeared on Autoblog on Mon, 22 Jun 2009 14:27:00 EST. Please see our terms for use of feeds.

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Putting It In Perspective: Largest bankruptcies in U.S. history displayed graphically

Chris Paukert — Fri, 12 Jun 2009 14:00:00 EST

Filed under: Trends, Chrysler, GM, Earnings/Financials

Click above to view Good Magazine's largest bankruptcies in U.S. history infographic

The benevolent-minded folks over at Good Magazine have commissioned infographic specialists Always With Honor to give us a little perspective on America's recent rash of bankruptcies. Using the 'sinking ship' metaphor to graphically show where the Chapter 11 filings of General Motors and Chrysler sit among the 20 biggest bankruptcies in U.S. history provides some interesting perspective on the ailments affecting America's auto industry and the economy at large.

Included in the graphic are high-profile filings like Lehman Brothers, Worldcom, and Enron, along with lesser-known companies like Calpine and General Growth Properties. Soberingly, Good notes that eight of the largest bankrutpcies in American history have come in the last two years.

Click on the image above to see the infographic in its entirety.

[Source: Good Magazine]

Putting It In Perspective: Largest bankruptcies in U.S. history displayed graphically originally appeared on Autoblog on Fri, 12 Jun 2009 14:00:00 EST. Please see our terms for use of feeds.

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REPORT: GM to declare bankruptcy before markets open, chief restructuring officer named

Chris Paukert — Sun, 31 May 2009 23:29:00 EST

Filed under: Government/Legal, GM, Earnings/Financials

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]

REPORT: GM to declare bankruptcy before markets open, chief restructuring officer named originally appeared on Autoblog on Sun, 31 May 2009 23:29:00 EST. Please see our terms for use of feeds.

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REPORT: Koenigsegg a finalist in bid to buy Saab

Chris Paukert — Fri, 29 May 2009 13:58:00 EST

Filed under: Europe, GM, Saab, Earnings/Financials, Rumormill

In a brief article on its website, the UK's Channel4 says that a Swedish newspaper, Dagens Industri, is reporting that supercar maker Koenigsegg is in the running to purchase either a stake in Saab, or the whole kit and caboodle.

According to the report, Koenigsegg is reportedly a front-runner to rescue the fellow Swedish automaker, with the other suitors being the Renco Group, a U.S. investment company, and the Italian automaker Fiat - the latter of which is being denied by both Fiat and Saab.

Automotive News has asked Saab to comment on the report, but spokeswoman Gunilla Gustavs declined, although she did say that the likely bankruptcy of parent company General Motors will not derail Saab's plans. Gustavs apparently did impart that GM plans to disclose a "preferred candidate" in the next few weeks.

If Christian von Koenigsegg and his band of merry men manage to get their hands on Saab, we can't help ourselves from wondering that with their expertise in supercars, perhaps they could bring the Aero X (above) to market. We can dream, can't we?

[Source: Channel4; Automotive News - subs. req.]

REPORT: Koenigsegg a finalist in bid to buy Saab originally appeared on Autoblog on Fri, 29 May 2009 13:58:00 EST. Please see our terms for use of feeds.

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Bloomberg says GM to file for Chapter 11 bankruptcy on Monday

Chris Paukert — Thu, 28 May 2009 16:02:00 EST

Filed under: Trends, Government/Legal, Earnings/Financials, Rumormill

Despite today's word of coming to terms with its major shareholders on a debt-for-equity swap, Bloomberg is reporting that General Motors will join Chrysler in filing for Chapter 11 bankruptcy on Monday. The move is widely expected, but the news agency is adding a bit of flesh to the story, suggesting that what promises to be the third-largest bankruptcy in U.S. history (after Lehman Bros. and Worldcom) will indeed result in the sale of most of the automaker's assets to a new company (likely the oft-discussed "Good GM"). GM's worldwide assets have been reported to be $91 billion against a total liability of $176.4 billion as of December 31.

A suggested location of the possible bankruptcy filing has not been disclosed. More details in the link below.

[Source: Bloomberg News | Image: Bill Pugliano/Getty]

Bloomberg says GM to file for Chapter 11 bankruptcy on Monday originally appeared on Autoblog on Thu, 28 May 2009 16:02:00 EST. Please see our terms for use of feeds.

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BREAKING: Visteon reportedly files for Chapter 11 bankruptcy

Chris Paukert — Thu, 28 May 2009 09:28:00 EST

Filed under: Trends, Government/Legal, Plants/Manufacturing, Ford, Earnings/Financials

According to Automotive News, Visteon Corp. has filed for Chapter 11 bankruptcy protection. The Michigan-based tier-1 supplier was spun off from the Ford Motor Company back in 2000, and it has struggled ever since. The filing took place in a Delaware courtroom, where the company has listed total assets of $4.58 billion and total debt of $5.3 million.

Visteon's struggles have been well documented, with its ballooning debt, falling sales (down by more than 50% in the first quarter of 2009 alone) resulting in a $681 million dollar loss last year. In fact, back in 2005, Visteon had to ask Ford to step in as part of an agreement that saw the Blue Oval agree to take ownership of all of the supplier's hourly employees who were United Auto Workers members, as well as most of the company's North American facilities.

Despite no longer technically being part of Ford, the Blue Oval is still Visteon's largest customer (accounting for around 31% of its sales last quarter), and according to AN, Visteon says that Ford is still committed to help the company with debtor-in-possession financing and future parts orders while the supplier undergoes restructuring.

[Source: Automotive News (subs. req.)| Image: Jonathan Ferrey/Getty]

BREAKING: Visteon reportedly files for Chapter 11 bankruptcy originally appeared on Autoblog on Thu, 28 May 2009 09:28:00 EST. Please see our terms for use of feeds.

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Speculation: Chrysler to cut loose 800 dealers on Thursday

Chris Shunk — Wed, 13 May 2009 19:01:00 EST

Filed under: Government/Legal, Chrysler

Chrysler has a lot of work to do in bankruptcy court to be eligible to receive another $6 billion in loans from the U.S. government. Among the many tasks requiring completion is the reduction of its dealer body. Chrysler hasn't set a timetable or announced how many dealers will be cut, but one lawyer claims to know the number and the date. Stephen Lerner from the law firm Squire Sanders reportedly said in a conference call that Chrysler is planning to cut 800 of its 3,200 dealers by Thursday of this week.

Chrysler calls the figure pure speculation, with spokeswoman Kathy Graham telling the Associated Press, "We do not have any finalized list as of this point in time." Few doubt that retail stores will be cut, though. The expected criteria for escaping the chopping block includes sales volume, profitability, available capital, strength of facilities and having all three Chrysler family brands. What hasn't been answered is whether dealers will be compensated for more than just existing inventory if the bankruptcy court agrees to tear up their franchise agreements.

We also don't know whether Stephen Lerner actually has any inside information regarding dealership closings. Squire Sanders is reportedly offering to represent any dealer that feels it could be on the closing list for $4,000. While that sounds like small change, the law firm could make millions if a large number of dealers participate in the suit. We'll find out tomorrow if Lerner is right.

[Source: MLive, Photo by Justin Sullivan/Getty]

Speculation: Chrysler to cut loose 800 dealers on Thursday originally appeared on Autoblog on Wed, 13 May 2009 19:01:00 EST. Please see our terms for use of feeds.

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REPORT: Obama administration slashes Chrysler ad budget by 50%

Chris Shunk — Tue, 12 May 2009 10:27:00 EST

Filed under: Government/Legal, Marketing/Advertising, Chrysler

Chrysler is nearly two weeks into its bankruptcy, and the Auburn Hills, Michigan-based automaker is already getting an idea of just how engaged the Obama administration plans to be in the process. Chrysler planned to spend $134 million dollars on advertising during its supposed nine weeks of bankruptcy, but the Auto Task Force has reportedly cut the figure in half. Judge Arthur Gonzalez wasn't even sure 50% spending was necessary, saying "idle plants, why market?" But the Task Force apparently says it recognizes that marketing is necessary during the bankruptcy to prevent the further erosion of the already battered Chrysler brand image.

Chrysler Marketing and Sales Vice President Steven Landry defended the decision to spend on advertising during the bankruptcy saying that the move "gives us the opportunity to reinforce that it's business as usual and demonstrate a bright future ahead for Chrysler." One commenter on Advertising Age took "business as usual" as a bad thing, as that mentality lead to "cars no one wanted to buy, zero innovation, outdated labor practices and a lot of taxpayer money thrown in to keep a sinking ship from going under."

Auto research site Edmunds.com told AdAge that the campaign appeared to be working for the first five days, saying interest on its consumer auto search site jumped by 15%. Interest in Chrysler vehicles dropped back to pre-bankruptcy levels after that, though. One dealer told AdAge that the only added interest appears to be from would-be buyers trying to "low ball" to see if dealers will take next to nothing just to liquify assets.

Chrysler's ad campaign during Chapter 11 consists of two corporate branding spots that touts Chrysler's wares and explains the Fiat situation. The other three spots are product ads for the Jeep Grand Cherokee, Dodge Grand Caravan, and Chrysler Town & Country.

[Source: Advertising Age]

REPORT: Obama administration slashes Chrysler ad budget by 50% originally appeared on Autoblog on Tue, 12 May 2009 10:27:00 EST. Please see our terms for use of feeds.

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Experts call GM bankruptcy 'almost inevitable' [w/POLL]

Chris Shunk — Mon, 11 May 2009 12:34:00 EST

Filed under: Trends, Government/Legal, GM, Earnings/Financials

To stave off bankruptcy, General Motors must rework its union contracts, drastically cut its capacity, workforce and dealer networks - and convince creditors to take 10 cents on the dollar on $27 billion in unsecured debt. In two months. That's a herculean task for any company, much less for a monolith the size of The General.

While GM is publicly working to avoid bankruptcy, some experts feel the largest of the Detroit automakers is simply lining up its creditors to expedite its Chapter 11 bankruptcy plans. In a new report by The Associated Press, the chorus of doubters is getting louder: "'I just don't see how it's possible, given all of the pieces,'" the AP quotes bankruptcy specialist Stephen J. Lubben, a professor at Seton Hall University School of Law.

For its part, the Auto Task Force and the Obama administration seem to think that a "surgical" bankruptcy could last only one to two months, a feat that many bankruptcy lawyers think is optimistic at best. One sticking point of negotiations with creditors is the apparenly disproportionate allocation of GM shares. The current plan is for the US government to receive 50%, while the UAW receives 39% to pay for retiree health care. That leaves just 1% for shareholders, and 10% for creditors. $27 billion doesn't seem to buy much these days. If creditors ultimately don't agree to the governments demands, though, bankruptcy is virtually guaranteed.

Bankruptcy could also make the most sense in dealing with GM's dealership problem. The General needs to cut thousands of retail stores; a move that will undoubtedly cost a fortune, especially outside of bankruptcy.

Others see the threat of bankruptcy as a ploy to make labor concessions and heavy bondholder concessions sound like a gift from above. GM can point to the situation with Chrysler as proof of how fast chapter 11 can happen, giving creditors plenty of reason to see things the General's way. With GM's deadline to meet the terms of the government's terms for financial assistance less than three weeks away, we'll know all too soon whether or not GM is bluffing.

View Poll

[Source: The Associated Press via Mlive | Image: Bill Pugliano/Getty]

Experts call GM bankruptcy 'almost inevitable' [w/POLL] originally appeared on Autoblog on Mon, 11 May 2009 12:34:00 EST. Please see our terms for use of feeds.

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Ford reacts to Chrysler bankruptcy

Chris Shunk — Mon, 04 May 2009 08:58:00 EST

Filed under: Chrysler, Ford

Although the automotive industry has been bracing for a Chrysler bankruptcy for some time, last week's official announcement of a Chapter 11 filing still came as a shock. One of the long-held assertions about bankruptcy was that once one domestic automaker filed, the others would eventually be forced to follow suit. The other belief was that bankruptcies would hamper the supply chain, which would in turn hurt other automakers besides the other Detroit 2.

Ford is out to assure its fans and stock holders that Chrysler's bankruptcy isn't going to hamper its supply chain or restructuring efforts. While Ford has planned its way around any problems with Chrysler, the company still wants to see a speedy recovery for the Pentastar. Ford's open letter to the public is a show of support for Chrysler, but it's even more an announcement that the Dearborn-based automaker is going to be largely unaffected by its competitor's bankruptcy. Hat tip to Thomas!

[Source: The Ford Story]

Ford reacts to Chrysler bankruptcy originally appeared on Autoblog on Mon, 04 May 2009 08:58:00 EST. Please see our terms for use of feeds.

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AP: Chrysler definitely filing for bankruptcy after debt talks "crumbled overnight"

Chris Paukert — Thu, 30 Apr 2009 09:59:00 EST

Filed under: Government/Legal, Chrysler, Earnings/Financials, Fiat

Building on speculation that first leaked yesterday is word this morning that a pair of Obama administration officials have told The Associated Press that Chrysler will indeed file for bankruptcy. The decision was apparently reached after debtor negotiations with hedge funds "crumbled overnight."

If the AP's sources are correct, we assume that the Chapter 11 announcement will be made quickly - likely later today. According to the report, President Obama is slated to talk about the auto industry at noon, at which point we wouldn't be surprised to hear him break the news.

A bankruptcy filing by the Pentastar is not expected to rule out a merger with Fiat, or indeed, trigger the shuttering of the company. Officials close to the proceedings have already gone on record saying that a deal with the Italian automaker could happen inside or outside of bankruptcy, and that arrangement could be finalized as early as today.

[Source: The Associated Press | Image: Andrew Cutraro/AFP/Getty ]

AP: Chrysler definitely filing for bankruptcy after debt talks "crumbled overnight" originally appeared on Autoblog on Thu, 30 Apr 2009 09:59:00 EST. Please see our terms for use of feeds.

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Fiat CEO Marchionne: "If I was a betting man, I would suggest Chrysler is going to fall into Chapter 11"

Jonathon Ramsey — Wed, 29 Apr 2009 16:57:00 EST

Filed under: Government/Legal, Chrysler, Earnings/Financials, UAW/Unions

After yesterday's Chrysler news regarding the first-lien holders and the U.S. Treasury coming to terms, we hope none of you thought the Pentastar had gotten off the see-saw. The latest tidbit comes from Fiat CEO Sergio Marchionne, but it comes via CAW head Ken Lewenza. According to Lewenza, Marchionne said that with two days left before Chrysler's got to show viability or go under, that "regardless of all the bondholders and stakeholders coming to the pump," if Marchionne had to put his money on the outcome he "would suggest Chrysler is going to fall into Chapter 11."

Also according to Lewenza, Marchionne also said "the Canadian plants are about as well positioned as you could possibly be,"so who knows, this could be Lewenza taking a dig at Chrysler and engaging in a little self promotion. Now we only have to wait and see if Fiat issues a 'clarification' of what Marchionne is reported to have said. For while Fiat isn't expected to put any money in for its potential stake in Chrysler, it is still being looked at as a possible savior, and those aren't the kinds of sentiments you want to hear from the person leading the cavalry moments before the battle is decided.

[Source: Auto News, sub req'd | Image: Giuseppe Cacace/Getty]

Fiat CEO Marchionne: "If I was a betting man, I would suggest Chrysler is going to fall into Chapter 11" originally appeared on Autoblog on Wed, 29 Apr 2009 16:57:00 EST. Please see our terms for use of feeds.

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GM, Task Force preparing for "surgical" bankruptcy

Damon Lavrinc — Mon, 13 Apr 2009 00:41:00 EST

Filed under: Government/Legal, GM

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]

GM, Task Force preparing for "surgical" bankruptcy originally appeared on Autoblog on Mon, 13 Apr 2009 00:41:00 EST. Please see our terms for use of feeds.

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REPORT: General Motors in "intense" bankruptcy preparations

Damon Lavrinc — Tue, 07 Apr 2009 13:57:00 EST

Filed under: Government/Legal, GM

According to an unnamed source speaking with Reuters, General Motors "is in 'intense' and 'earnest' preparations for a possible bankruptcy filing." The report states that GM could be split into two separate entities; one "new" unit consisting of the General's successful brands (read: Chevrolet and Cadillac) and an "old" unit made up of its less-profitable endeavors (Hummer, Saab, Pontiac and Saturn).

If the plan is enacted, the all-new GM would assume some of the debt from the bankruptcy (primarily, unsecured debt) and that GM's bondholders would lose a substantial amount of value if the Chapter 11 filings go through. Naturally, neither source wished to be named, so this is all conjecture at this point, but if GM does declare CH11 within the next month-and-half, expect the Feds to step in to avoid the cataclysmic effect on both suppliers and the economy as a whole.

[Source: Reuters]

REPORT: General Motors in "intense" bankruptcy preparations originally appeared on Autoblog on Tue, 07 Apr 2009 13:57:00 EST. Please see our terms for use of feeds.

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Flying J grounded, files for Chapter 11 bankruptcy

Jonathon Ramsey — Wed, 24 Dec 2008 18:57:00 EST

Filed under: Etc., Earnings/Financials

Whenever we drive from Los Angeles to Phoenix, we always stop at the Flying J in Blythe, California to refuel - and that might mean "refueling" on coffee, trail mix and a rented audiobook instead of gasoline.

As it turns out, though, our favorite truck stop chain's production, refining, and pipeline business has been KO'ed by the recent drop in oil prices and the credit crunch. As a result, the Flying J has nosedived into Chapter 11 bankruptcy protection. According to company president J. Phillip Adams, the filing is the result of a liquidity shortage. Says Adams, "With this sudden and unanticipated inability to meet our liquidity needs, we regret that we had no other choice than a Chapter 11 filing to enable us to stabilize our financial base." The company's liabilities are estimated to be anywhere between $100 million and $500 million, but according to court documents, FJ has assets worth upwards of $1 billion.

The bankruptcy proceedings are not expected to affect supplies on the West Coast, and no layoffs are as a result of the filing.

Flying J, we pray for your speedy return to health.

[Source: AOL]

Flying J grounded, files for Chapter 11 bankruptcy originally appeared on Autoblog on Wed, 24 Dec 2008 18:57:00 EST. Please see our terms for use of feeds.

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