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A Primer on the G.M. Bankruptcy
G.M. bankruptcy will be one of the largest and most complex in history.
Full Coverage: The Auto Bailout »
Now a G.M. Owner, U.A.W. Faces Delicate Balancing Act
By STEVEN GREENHOUSE Life has become more complicated for the United Automobile Workers union, a sometime antagonist and now a major shareholder.
By STEVEN GREENHOUSE Life has become more complicated for the United Automobile Workers union, a sometime antagonist and now a major shareholder.
Obama Is Upbeat for G.M.'s Future
By BILL VLASIC and NICK BUNKLEY President Obama described the investment of more billions of taxpayer dollars in G.M. as necessary to avert a calamity that could hurt millions of people.
By BILL VLASIC and NICK BUNKLEY President Obama described the investment of more billions of taxpayer dollars in G.M. as necessary to avert a calamity that could hurt millions of people.
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Documents
News Analysis
Obama's Test: Restoring G.M. With a Limited U.S. Role
By DAVID E. SANGER The longer the government holds on to its stake in General Motors, the more the pressures will build to intervene in its business.
Obama's Test: Restoring G.M. With a Limited U.S. Role
By DAVID E. SANGER The longer the government holds on to its stake in General Motors, the more the pressures will build to intervene in its business.
On the Tumultuous & Colorful Life of GM - Stephen Miller, The Daily Beast
It's the End of GM As We New It - Jonathan Cohn, The New Republic
How Rick Wagoner Lost General Motors - Jeffrey Sonnenfeld, BusinessWeek
What I Learned as a Car Czar - Ion Mihai Pacepa, Wall Street Journal
Banks Dig In for Fight Against Rules - Morgenson & Van Natta, NY Times
It's the End of GM As We New It - Jonathan Cohn, The New Republic
How Rick Wagoner Lost General Motors - Jeffrey Sonnenfeld, BusinessWeek
What I Learned as a Car Czar - Ion Mihai Pacepa, Wall Street Journal
Banks Dig In for Fight Against Rules - Morgenson & Van Natta, NY Times
General Motors: The Obama Motor Co. - Editorial, Wall Street Journal
GM Holds a Mirror Up to America - Robert Reich, Financial Times
GM Holds a Mirror Up to America - Robert Reich, Financial Times
What Happens to GM Pensions In Bankruptcy? - Douglas Elliott, Brookings
Obama Owns an Auto Company. What Now? - Jerry Hirsch, LA Times
Bureaucrats in Driver's Seat at Government Motors - Alex Taylor, Fortune
U.S. Hopes To Recoup GM Outlay In 5 Years - Peter Whoriskey, Wash Post
Little Green Cars - Larry Kudlow, RealClearMarkets
Bureaucrats in Driver's Seat at Government Motors - Alex Taylor, Fortune
U.S. Hopes To Recoup GM Outlay In 5 Years - Peter Whoriskey, Wash Post
Little Green Cars - Larry Kudlow, RealClearMarkets
Obama Must Not Stifle The Dynamism of Capitalism - The Economist
This Is Joseph Schumpeter's Moment - Carl Schramm, Wall Street Journal
The Extraordinary Auto Intervention - Steven Pearlstein, Washington Post
GM and the U.S. Taxpayer - Editorial, Los Angeles Times
Here Come the GM Bankruptcy Parasites - Daniel Gross, Slate
This Is Joseph Schumpeter's Moment - Carl Schramm, Wall Street Journal
The Extraordinary Auto Intervention - Steven Pearlstein, Washington Post
GM and the U.S. Taxpayer - Editorial, Los Angeles Times
Here Come the GM Bankruptcy Parasites - Daniel Gross, Slate
How GM Lost Its Way - Paul Ingrassia, Wall Street Journal
GM: A Temporary Reprieve - Eugene Robinson, Washington Post
GM: A Temporary Reprieve - Eugene Robinson, Washington Post
GM & The Law of Unintended Consequences - Lee Cary, American Thinker
The End of GM As We Know It - Jonathan Cohn, The New Republic
General Motors Holds Mirror Up to America - Robert Reich, Financial Times
Taxpayers Foot Bill for Politically Driven GM - Peter Ferrara, FOX News
Goodbye, GM - Michael Moore, Huffington Post
The End of GM As We Know It - Jonathan Cohn, The New Republic
General Motors Holds Mirror Up to America - Robert Reich, Financial Times
Taxpayers Foot Bill for Politically Driven GM - Peter Ferrara, FOX News
Goodbye, GM - Michael Moore, Huffington Post
Meet the New, Government-Owned GM - Alex Taylor, Fortune
The Fall of an American Giant - Micheline Maynard, New York Times
What I Learned as a Car Czar - Ion Mihai Pacepa, Wall Street Journal
Is $50 Billion the Limit for GM? Don't Bet On It - Mickey Kaus, Slate
The Fall of an American Giant - Micheline Maynard, New York Times
What I Learned as a Car Czar - Ion Mihai Pacepa, Wall Street Journal
Is $50 Billion the Limit for GM? Don't Bet On It - Mickey Kaus, Slate
Roundtable on ABC's This Week
Gov't & GM: How Reluctant a Shareholder? - James Gattuso, The Foundry
GM Isn't a "Significant Swath of Corporate America" - M.Y., Think Progress
Don't Shed Too Many Tears for Ford - Stephen Spruiell, The Corner
With GM Out, Who's In the Dow and How? - Seyward Darby, The Plank
GM Isn't a "Significant Swath of Corporate America" - M.Y., Think Progress
Don't Shed Too Many Tears for Ford - Stephen Spruiell, The Corner
With GM Out, Who's In the Dow and How? - Seyward Darby, The Plank
GM News by CalculatedRisk on 6/01/2009 09:30:00 PM
Just some excerpts ...
From the WSJ: Filings Reveal Depth of Problems
From the WSJ: GM to Announce Tentative Hummer Sale
Just some excerpts ...
From the WSJ: Filings Reveal Depth of Problems
General Motors Corp.'s $82.2 billion in assets and $172 billion in liabilities spell out the extent of its problems and sheer breadth of the 101-year-old giant's bankruptcy.More details from Bloomberg: GM Files Bankruptcy to Spin Off More Competitive Firm
In a torrent of filings at the U.S. Bankruptcy Court in Manhattan, GM's mind-numbing scale is evident: It has 463 subsidiaries and has built 450 million cars and trucks over the years. It employs 235,000 people worldwide. This includes 91,000 in the United States, which it pays $476 million each month, and 493,000 retirees with various benefits. It spends $50 billion a year buying parts and services from 11,500 vendors in North America.
From the WSJ: GM to Announce Tentative Hummer Sale
General Motors Corp., fresh off filing for bankruptcy protection Monday, will start its second day of court proceedings by announcing the tentative sale of the Hummer brand ...Auto sales for May will be announced tomorrow. The bankruptcy of Chrysler - and now GM - will probably depress auto sales further for a few months, although probably not by much.
The GM bankruptcy:
How Washington blew GM's bankruptcy
Michael Levine, Financial Times, June 1, 2009 The administration took a tragic situation and turned it into an expensive mess to pay a political debt, needlessly wasting billions of dollars in the process, writes Michael Levine.
The Quagmire Ahead
David Brooks, New York Times, June 1, 2009 The Obama plan for General Motors is bureaucratically smart and financially tough-minded, but it won't revolutionize the company's corporate culture. It could make things worse.
'A hands-off approach'
Steven Rattner and Ron Bloom, USA Today, June 2, 2009 GM's managers, not government, will decide what's made where.
How GM Lost Its Way
Paul Ingrassia, Wall Street Journal, June 2, 2009 Timid management and coddled workers couldn't compete with Toyota.
Our Car Company [b]Eugene Robinson, Washington Post, June 2, 2009[/b] We All Own GM. Don't Bet on a Happy Ending.
GM's Final Clawback?
Leo Kolivakis, Pension Pulse, June 2, 2009 I am now getting this sick feeling in my stomach that GM's bankruptcy is just the tip of the iceberg, especially when it comes to U.S. and global pension woes.
The Future of Manufacturing, GM, and American Workers (Part III) Robert Reich, June 1, 2009 Getting repaid cannot be the main goal of the bail-out. Presumably, the reason is to serve some larger public purpose. But the goal is not obvious.
GM: What's in It for the Taxpayers?
Theo Francis, BusinessWeek, June 1, 2009 Aside from maintaining jobs and stability, the rescue offers a long shot at breaking even, let alone an investment profit.
Value: Worthless. Market Price: $458 Million.
Floyd Norris, Notions on High and Low Finance, June 1, 2009 Can anyone offer any rational explanation for the action today in G.M. stock?
How Washington blew GM's bankruptcy
Michael Levine, Financial Times, June 1, 2009 The administration took a tragic situation and turned it into an expensive mess to pay a political debt, needlessly wasting billions of dollars in the process, writes Michael Levine.
The Quagmire Ahead
David Brooks, New York Times, June 1, 2009 The Obama plan for General Motors is bureaucratically smart and financially tough-minded, but it won't revolutionize the company's corporate culture. It could make things worse.
'A hands-off approach'
Steven Rattner and Ron Bloom, USA Today, June 2, 2009 GM's managers, not government, will decide what's made where.
How GM Lost Its Way
Paul Ingrassia, Wall Street Journal, June 2, 2009 Timid management and coddled workers couldn't compete with Toyota.
Our Car Company [b]Eugene Robinson, Washington Post, June 2, 2009[/b] We All Own GM. Don't Bet on a Happy Ending.
GM's Final Clawback?
Leo Kolivakis, Pension Pulse, June 2, 2009 I am now getting this sick feeling in my stomach that GM's bankruptcy is just the tip of the iceberg, especially when it comes to U.S. and global pension woes.
The Future of Manufacturing, GM, and American Workers (Part III) Robert Reich, June 1, 2009 Getting repaid cannot be the main goal of the bail-out. Presumably, the reason is to serve some larger public purpose. But the goal is not obvious.
GM: What's in It for the Taxpayers?
Theo Francis, BusinessWeek, June 1, 2009 Aside from maintaining jobs and stability, the rescue offers a long shot at breaking even, let alone an investment profit.
Value: Worthless. Market Price: $458 Million.
Floyd Norris, Notions on High and Low Finance, June 1, 2009 Can anyone offer any rational explanation for the action today in G.M. stock?
JOHN NICHOLS
The 'New GM': Layoffs, Factory Closings, Offshoring thenation.com - The trouble with the whole "Nixon goes to China" theory is that sometimes the "bold" gesture is really just more of the same. This is an important reality to recognize as the major media plays up the reshaping of General Motors by the Obama administration's auto-industry task force as a courageous or groundbreaking "new" initiative to "save" domestic automaking.
MICHAEL MOORE
Goodbye, GM truthout.org - I write this on the morning of the end of the once-mighty General Motors. By high noon, the President of the United States will have made it official: General Motors, as we know it, has been totaled.
EUGENE ROBINSON
A Lemon of a Bailout truthdig.com - With the company's bankruptcy filing on Monday, we the people have become majority owners of a museum-quality piece of industrial history. President Obama said his administration plans to leave management of the company to the professionals. At this point, I have to wonder why.
The 'New GM': Layoffs, Factory Closings, Offshoring thenation.com - The trouble with the whole "Nixon goes to China" theory is that sometimes the "bold" gesture is really just more of the same. This is an important reality to recognize as the major media plays up the reshaping of General Motors by the Obama administration's auto-industry task force as a courageous or groundbreaking "new" initiative to "save" domestic automaking.
MICHAEL MOORE
Goodbye, GM truthout.org - I write this on the morning of the end of the once-mighty General Motors. By high noon, the President of the United States will have made it official: General Motors, as we know it, has been totaled.
EUGENE ROBINSON
A Lemon of a Bailout truthdig.com - With the company's bankruptcy filing on Monday, we the people have become majority owners of a museum-quality piece of industrial history. President Obama said his administration plans to leave management of the company to the professionals. At this point, I have to wonder why.
GM, Bankruptcy, and the Morning After On the morning after GM entered bankruptcy, President Obama tries to reassure the public about the government's "hands off" role, pundits ponder what it means for working class Americans, and investors barely notice, while taxpayers, auto-workers and retirees count their losses; On the same day that GM took its first step into bankruptcy, and Chrysler began its journey out of bankruptcy, President Obama tried to reassure the nation that the government's ownership role will be short-term. Associated Press; But with billions at stake, taxpayers may not see any gains or benefits, except for avoiding even worse consequences. LA Times; The Nation's John Nichols echos Bruce Springsteen ("Foreman says these jobs are going, boys, and they ain't coming back..."), and paints "the New GM" and the auto bailout as business as usual; Robert Reich picks up the chorus, on what the adminisration isn't saying about GM and the auto bailout, and why: "But it is not telling anyone the complete truth: GM will disappear, eventually. The bail-out is designed to give the economy time to reduce the social costs of the blow..."; Can government keep politics out of the GM bailout? McClatchy lays out the political maneuvering underway and previews what's at stake in the 2010 Elections; Maybe, maybe not, but conspiracy theorists can't resist. Matt Taibbi's got latest: Obama's targeting Republican car dealerships.
On the morning after GM entered bankruptcy, President Obama tries to reassure the public about the government's "hands off" role, pundits ponder what it means for working class Americans, and investors barely notice, while taxpayers, auto-workers and retirees count their losses; On the same day that GM took its first step into bankruptcy, and Chrysler began its journey out of bankruptcy, President Obama tried to reassure the nation that the government's ownership role will be short-term. Associated Press; But with billions at stake, taxpayers may not see any gains or benefits, except for avoiding even worse consequences. LA Times; The Nation's John Nichols echos Bruce Springsteen ("Foreman says these jobs are going, boys, and they ain't coming back..."), and paints "the New GM" and the auto bailout as business as usual; Robert Reich picks up the chorus, on what the adminisration isn't saying about GM and the auto bailout, and why: "But it is not telling anyone the complete truth: GM will disappear, eventually. The bail-out is designed to give the economy time to reduce the social costs of the blow..."; Can government keep politics out of the GM bailout? McClatchy lays out the political maneuvering underway and previews what's at stake in the 2010 Elections; Maybe, maybe not, but conspiracy theorists can't resist. Matt Taibbi's got latest: Obama's targeting Republican car dealerships.
Obama Should Not Have Nationalized GM - Denver Post
Crashing GM
Bankrupt Thinking
By ROBERT WEISSMAN
What in the world is the Obama administration thinking? The GM bankruptcy -- entirely avoidable -- seems designed to hurt every constituency it is supposed to assist.
First, as to the avoidability issue: There's no doubt that chronic mismanagement and the deep recession have left GM in dire straits. But with the government pouring tens of billions of dollars into the company, it is clear that needed restructuring could have been done outside of bankruptcy. By last week, even the problem of bondholders who sought $27 billion from the company (the government and GM were offering a 10 percent stake in the new company) was moving to resolution. Yet the Obama administration's auto task force has plunged GM into bankruptcy nonetheless. Why? There's no obvious answer to that question.
Why does it matter? It matters because bankruptcy may further tarnish GM's already very weakened brand, and make recovery for the company much more difficult. It matters because it creates some unique problems. And it matters because it forecloses -- or, at least makes more difficult -- other ways to reorganize the company.
The GM/auto task force plan for bankruptcy and restructuring -- shaped by a secretive, unaccountable group of Wall Street expats without expertise in the industry -- seems designed above all to perpetuate GM as a corporate entity. Preserving corporate GM should be not an end, but a means to protecting workers and their communities, preserving the U.S. manufacturing base, forcing the industry onto an innovative and ecologically sustainable path, and advancing consumer interests. It fails to meet any of these objectives, in entirely avoidable ways.
GM probably needs to be downsized, but there are questions about the extent to which it should be downsized and the method. There are very significant questions about decisions being made to eliminate brands, close factories and terminate dealer relationships. The auto task force may well be needlessly costing tens or hundreds of thousands of jobs at auto plants and suppliers. It has authorized the closing of many hundreds of GM and Chrysler dealerships, even though these dealerships do not impose meaningful costs on the manufacturers. Dealership closings alone will result in more than 100,000 lost jobs.
While there is probably a need to reduce GM's capacity, there is no need to cut worker wages and benefits. Auto worker wages contribute less than 10 percent of the cost of a car, so even the most draconian cuts will do little to increase profits. Yet the Obama administration's auto task force helped push the United Auto Workers into further acceptance of a two-tier wage structure that will make new auto jobs paid just a notch above Home Depot jobs. This will drag down pay across the auto industry, with ripple effects throughout the entire manufacturing sector. Stunningly, the Obama administration brags that "the concessions that the UAW agreed to are more aggressive than what the Bush Administration originally demanded in its loan agreement with GM."
The ultimate evidence of the task force's disconnect from its public mission is its approval of GM plans to increase outsourcing production of cars for sale in the United States. GM has now disclosed its intent to begin production in China for sale in the United States. What is the possible rationale of permitting a company propped up with U.S. taxpayer funds to increase production overseas for sale in the U.S. market? The point of the bailout is not to make GM profitable at any cost, but to protect the communities that rely on the automaker, as well as U.S. manufacturing capacity.
Finally, if the Chrysler bankruptcy is a harbinger, the bankruptcy is likely to wipe out the legal claims of people injured by defective and dangerous GM cars.
None of this need be so. The government could have averted bankruptcy. It could have sent its plans to Congress for more careful review. It could have demanded that worker wages and conditions be maintained or improved, rather than worsened. It could have been more surgical in the downsizing it is requiring, and more forward-looking at preserving manufacturing capacity. The government could (and still can) choose to accept sucessorship liability in the New GM for the injuries inflicted on real people by Old GM.
Some of these avoidable harms can still be averted, if the Obama administration chooses to exert the control that attaches to owning 60 percent of GM. Unfortunately, President Obama says, to the contrary, that "our goal is to get GM back on its feet, take a hands-off approach, and get out quickly."
Robert Weissman is editor of the Washington, D.C.-based Multinational Monitor and director of Essential Action.
Bankrupt Thinking
By ROBERT WEISSMAN
What in the world is the Obama administration thinking? The GM bankruptcy -- entirely avoidable -- seems designed to hurt every constituency it is supposed to assist.
First, as to the avoidability issue: There's no doubt that chronic mismanagement and the deep recession have left GM in dire straits. But with the government pouring tens of billions of dollars into the company, it is clear that needed restructuring could have been done outside of bankruptcy. By last week, even the problem of bondholders who sought $27 billion from the company (the government and GM were offering a 10 percent stake in the new company) was moving to resolution. Yet the Obama administration's auto task force has plunged GM into bankruptcy nonetheless. Why? There's no obvious answer to that question.
Why does it matter? It matters because bankruptcy may further tarnish GM's already very weakened brand, and make recovery for the company much more difficult. It matters because it creates some unique problems. And it matters because it forecloses -- or, at least makes more difficult -- other ways to reorganize the company.
The GM/auto task force plan for bankruptcy and restructuring -- shaped by a secretive, unaccountable group of Wall Street expats without expertise in the industry -- seems designed above all to perpetuate GM as a corporate entity. Preserving corporate GM should be not an end, but a means to protecting workers and their communities, preserving the U.S. manufacturing base, forcing the industry onto an innovative and ecologically sustainable path, and advancing consumer interests. It fails to meet any of these objectives, in entirely avoidable ways.
GM probably needs to be downsized, but there are questions about the extent to which it should be downsized and the method. There are very significant questions about decisions being made to eliminate brands, close factories and terminate dealer relationships. The auto task force may well be needlessly costing tens or hundreds of thousands of jobs at auto plants and suppliers. It has authorized the closing of many hundreds of GM and Chrysler dealerships, even though these dealerships do not impose meaningful costs on the manufacturers. Dealership closings alone will result in more than 100,000 lost jobs.
While there is probably a need to reduce GM's capacity, there is no need to cut worker wages and benefits. Auto worker wages contribute less than 10 percent of the cost of a car, so even the most draconian cuts will do little to increase profits. Yet the Obama administration's auto task force helped push the United Auto Workers into further acceptance of a two-tier wage structure that will make new auto jobs paid just a notch above Home Depot jobs. This will drag down pay across the auto industry, with ripple effects throughout the entire manufacturing sector. Stunningly, the Obama administration brags that "the concessions that the UAW agreed to are more aggressive than what the Bush Administration originally demanded in its loan agreement with GM."
The ultimate evidence of the task force's disconnect from its public mission is its approval of GM plans to increase outsourcing production of cars for sale in the United States. GM has now disclosed its intent to begin production in China for sale in the United States. What is the possible rationale of permitting a company propped up with U.S. taxpayer funds to increase production overseas for sale in the U.S. market? The point of the bailout is not to make GM profitable at any cost, but to protect the communities that rely on the automaker, as well as U.S. manufacturing capacity.
Finally, if the Chrysler bankruptcy is a harbinger, the bankruptcy is likely to wipe out the legal claims of people injured by defective and dangerous GM cars.
None of this need be so. The government could have averted bankruptcy. It could have sent its plans to Congress for more careful review. It could have demanded that worker wages and conditions be maintained or improved, rather than worsened. It could have been more surgical in the downsizing it is requiring, and more forward-looking at preserving manufacturing capacity. The government could (and still can) choose to accept sucessorship liability in the New GM for the injuries inflicted on real people by Old GM.
Some of these avoidable harms can still be averted, if the Obama administration chooses to exert the control that attaches to owning 60 percent of GM. Unfortunately, President Obama says, to the contrary, that "our goal is to get GM back on its feet, take a hands-off approach, and get out quickly."
Robert Weissman is editor of the Washington, D.C.-based Multinational Monitor and director of Essential Action.
GM Bankruptcy Judge Approves Asset Sale on First Day (Update2)
By Linda Sandler, Chris Scinta, Bob Van Voris and Jeff Green
June 2 (Bloomberg) -- General Motors Corp. won court approval on its first day in bankruptcy to sell its best assets next month to a streamlined entity it plans to use to compete in world markets with the help of $65 billion in government loans.
The automaker, the largest manufacturer to seek protection from creditors, also won permission yesterday from Judge Robert Gerber in Manhattan to draw $15 billion from a $33.3 billion bankruptcy loan. GM today said it has an agreement with an unidentified buyer for its Hummer sport-utility vehicle unit.
Detroit-based GM plans to form a new company in 60 to 90 days, built around its Cadillac, Chevrolet, Buick and GMC brands in the U.S. The lead bidder for the assets is the U.S. Treasury, which will provide the 100-year-old company with billions in loans that would be converted into a 60 percent equity stake.
"There's only one prospective purchaser," GM attorney Harvey Miller told Gerber, referring to the U.S. government's offer for the new GM. "There's no entity that has the wherewithal to bid in these cases."
The automaker missed yesterday's deadline to show the U.S. government it could reorganize without court protection, reporting $172.8 billion in debt -- more than twice the listed value of its assets.
The filing was a "defining moment in the reinvention of GM," said Fritz Henderson, president and chief executive officer of the carmaker. "The economic crisis has caused enormous disruption in the auto industry."
Defining Moment
One idle GM facility in the U.S. will be retooled to make small, fuel-efficient cars as part of an agreement with union workers, GM said May 29. Under the deal to sell Hummer announced today, the identity of the buyer and financial terms aren't yet being disclosed.
GM's Saab unit is reorganizing in Sweden. The German government picked Magna International Inc., a Canadian car-parts maker, as the preferred bidder to buy the company's Opel unit.
The GM Chapter 11 petition makes the carmaker's reorganization the third-largest bankruptcy in U.S. history, ranked by total assets listed in the initial filing, after Lehman Brothers Holdings Inc. and WorldCom Inc.
"This is a step they should have taken more than a year ago, which could have put them in much better shape," said Stephen Pope, chief global strategist at Cantor Fitzgerald in London.
GM listed in its petition as top creditors Wilmington Trust Co., representing bondholders owed $22.8 billion; United Auto Workers, owed $20.6 billion; and Deutsche Bank AG, representing bondholders owed $4.44 billion. The Unofficial GM Dealers Committee, which said it represents more than 6,000 U.S. GM dealers, filed a notice that it will take part in the case.
Chrysler's Filing
Before declaring bankruptcy, GM received $20.57 billion in U.S. Treasury loans, according to court filings. Administration officials said yesterday the government would advance $30 billion more, with another $9.5 billion from the Canadian government. The GM board authorized borrowing as much as $65 billion.
"GM and its stakeholders have produced a viable, achievable plan that will give this iconic American company a chance to rise again," President Barack Obama said yesterday. The government was becoming a "reluctant" owner of the automaker, Obama said, adding that his goal was to "take a hands-off approach and get out quickly."
GM said yesterday that the new company would have total debt of $17 billion, excluding liabilities such as a workers' health-care trust. The filing said the loan total from the U.S. and Canadian government could grow to as much as $65 billion.
Equity Share
Chrysler LLC, the automaker that filed for bankruptcy April 30, listed $39 billion in assets in its petition. The Auburn Hills, Michigan-based carmaker plans to transfer most of its assets to a new entity run by Italy's Fiat SpA. Another bankruptcy judge in New York approved that deal May 31.
Aside from the U.S. government's equity share, GM's statement called for a worker health-care fund to get a 17.5 percent stake and the Canadian government to take 11.7 percent. Bondholders would be eligible for 10 percent and warrants to buy another 15 percent.
There would be no initial public trading of the shares, some of which will be given to the Canadian government in exchange for loans, an administration official said last week. The company might remain private for as long as 18 months, said the official, who asked not to be identified.
Because of its size, GM faces more obstacles than Chrysler in resolving creditor claims that remain in bankruptcy after the new company is created. Reeling from almost $88 billion in losses since 2004, GM may not return to profitability if U.S. vehicle sales are below 10 million a year, an amount the government said a new GM will need to break even.
Speedy Sale
GM filed a request to sell most of its assets to a Treasury-sponsored entity that will hold the government's stake in the company. GM's board of directors said in court papers that an asset sale to the Treasury is "expedient."
Of the government funding, "approximately" $30.1 billion in new money will be advanced by the Treasury, according to the filing.
GM's Saturn LLC and Saturn Distribution Corp. also sought court protection yesterday. The Chapter 11 petitions are the "only opportunity for preserving" the Saturn brand, according to the filings.
"Just a couple of months ago, it was predicted by some that a bankruptcy filing by GM would inevitably lead to its demise," said Lynn Hiestand, a lawyer specializing in restructuring with Skadden, Arps, Slate, Meagher & Flom LLP. "That remains to be seen." Hiestand's firm represents Delphi Corp., GM's former parts unit, in a separate U.S. bankruptcy.
J.P. Morgan
The automaker was founded in 1908 by William "Billy" Durant, who bought more than 20 car companies before being ousted in a 1920 bailout by Pierre Du Pont and J.P. Morgan.
By the 1960s, GM controlled more than half the U.S. vehicle market. In 2008, it sold only 8.35 million cars worldwide, losing its place as the world's biggest automaker to Toyota Motor Corp. as customers opted for the Japanese carmaker's fuel- efficient Corolla and Camry brands instead of GM's light trucks and Hummers.
GM will introduce several vehicles in 2009 and 2010, the company said, including the Chevrolet Camaro, the Buick LaCrosse, the Cadillac SRX and CTS Sport Wagon, the Chevy Equinox and the Chevy Cruze, GM's "new global compact car."
Also scheduled for production is the Chevy Volt, "an extended-range electric vehicle that can travel up to 40 miles on battery power alone with the extended-range capability of more than 300 total miles," the company said.
Delphi Deal
Yesterday's filing will trigger credit-default swaps protecting about $3.1 billion of GM debt, in the biggest settlement of the derivatives since September's collapse of Lehman Brothers. Pricing reflected the risks last week as dealers charged about $8.7 million upfront and $500,000 annually to protect $10 million of debt.
Banks such as JPMorgan Chase & Co. secured GM's revolving loan of about $4.5 billion with inventory, receivables and factories, also providing a $1.5 billion term loan.
The automaker agreed to buy back ownership of Delphi plants in Wyoming, Michigan; Lockport and Rochester, New York; and Kokomo, Indiana, according to a Delphi statement yesterday.
The requests approved by Gerber include permission for GM to honor vehicle warranties and dealer-incentive programs, the company said in a statement. GM said it also won approval to meet obligations to employees and retirees as well as fulfill financing agreements and pay "essential suppliers."
Deadline
The judge said objections to the sale must be filed by June 19 and set a deadline of June 22 for competing bids.
Gerber also presides over the bankruptcies of Lyondell Chemical Co. and BearingPoint Inc. He handled the Adelphia Communications Corp. and Global Crossing Ltd. cases as well.
"The gravity of the circumstances cannot be overstated," GM said in court papers. "The business and assets to be transferred are extremely sensitive and will be subject to major value erosion unless they are quickly sold and transferred to New GM."
The case is In re General Motors Corp., 09-50026, U.S. Bankruptcy Court, Southern District, New York (Manhattan).
By Linda Sandler, Chris Scinta, Bob Van Voris and Jeff Green
June 2 (Bloomberg) -- General Motors Corp. won court approval on its first day in bankruptcy to sell its best assets next month to a streamlined entity it plans to use to compete in world markets with the help of $65 billion in government loans.
The automaker, the largest manufacturer to seek protection from creditors, also won permission yesterday from Judge Robert Gerber in Manhattan to draw $15 billion from a $33.3 billion bankruptcy loan. GM today said it has an agreement with an unidentified buyer for its Hummer sport-utility vehicle unit.
Detroit-based GM plans to form a new company in 60 to 90 days, built around its Cadillac, Chevrolet, Buick and GMC brands in the U.S. The lead bidder for the assets is the U.S. Treasury, which will provide the 100-year-old company with billions in loans that would be converted into a 60 percent equity stake.
"There's only one prospective purchaser," GM attorney Harvey Miller told Gerber, referring to the U.S. government's offer for the new GM. "There's no entity that has the wherewithal to bid in these cases."
The automaker missed yesterday's deadline to show the U.S. government it could reorganize without court protection, reporting $172.8 billion in debt -- more than twice the listed value of its assets.
The filing was a "defining moment in the reinvention of GM," said Fritz Henderson, president and chief executive officer of the carmaker. "The economic crisis has caused enormous disruption in the auto industry."
Defining Moment
One idle GM facility in the U.S. will be retooled to make small, fuel-efficient cars as part of an agreement with union workers, GM said May 29. Under the deal to sell Hummer announced today, the identity of the buyer and financial terms aren't yet being disclosed.
GM's Saab unit is reorganizing in Sweden. The German government picked Magna International Inc., a Canadian car-parts maker, as the preferred bidder to buy the company's Opel unit.
The GM Chapter 11 petition makes the carmaker's reorganization the third-largest bankruptcy in U.S. history, ranked by total assets listed in the initial filing, after Lehman Brothers Holdings Inc. and WorldCom Inc.
"This is a step they should have taken more than a year ago, which could have put them in much better shape," said Stephen Pope, chief global strategist at Cantor Fitzgerald in London.
GM listed in its petition as top creditors Wilmington Trust Co., representing bondholders owed $22.8 billion; United Auto Workers, owed $20.6 billion; and Deutsche Bank AG, representing bondholders owed $4.44 billion. The Unofficial GM Dealers Committee, which said it represents more than 6,000 U.S. GM dealers, filed a notice that it will take part in the case.
Chrysler's Filing
Before declaring bankruptcy, GM received $20.57 billion in U.S. Treasury loans, according to court filings. Administration officials said yesterday the government would advance $30 billion more, with another $9.5 billion from the Canadian government. The GM board authorized borrowing as much as $65 billion.
"GM and its stakeholders have produced a viable, achievable plan that will give this iconic American company a chance to rise again," President Barack Obama said yesterday. The government was becoming a "reluctant" owner of the automaker, Obama said, adding that his goal was to "take a hands-off approach and get out quickly."
GM said yesterday that the new company would have total debt of $17 billion, excluding liabilities such as a workers' health-care trust. The filing said the loan total from the U.S. and Canadian government could grow to as much as $65 billion.
Equity Share
Chrysler LLC, the automaker that filed for bankruptcy April 30, listed $39 billion in assets in its petition. The Auburn Hills, Michigan-based carmaker plans to transfer most of its assets to a new entity run by Italy's Fiat SpA. Another bankruptcy judge in New York approved that deal May 31.
Aside from the U.S. government's equity share, GM's statement called for a worker health-care fund to get a 17.5 percent stake and the Canadian government to take 11.7 percent. Bondholders would be eligible for 10 percent and warrants to buy another 15 percent.
There would be no initial public trading of the shares, some of which will be given to the Canadian government in exchange for loans, an administration official said last week. The company might remain private for as long as 18 months, said the official, who asked not to be identified.
Because of its size, GM faces more obstacles than Chrysler in resolving creditor claims that remain in bankruptcy after the new company is created. Reeling from almost $88 billion in losses since 2004, GM may not return to profitability if U.S. vehicle sales are below 10 million a year, an amount the government said a new GM will need to break even.
Speedy Sale
GM filed a request to sell most of its assets to a Treasury-sponsored entity that will hold the government's stake in the company. GM's board of directors said in court papers that an asset sale to the Treasury is "expedient."
Of the government funding, "approximately" $30.1 billion in new money will be advanced by the Treasury, according to the filing.
GM's Saturn LLC and Saturn Distribution Corp. also sought court protection yesterday. The Chapter 11 petitions are the "only opportunity for preserving" the Saturn brand, according to the filings.
"Just a couple of months ago, it was predicted by some that a bankruptcy filing by GM would inevitably lead to its demise," said Lynn Hiestand, a lawyer specializing in restructuring with Skadden, Arps, Slate, Meagher & Flom LLP. "That remains to be seen." Hiestand's firm represents Delphi Corp., GM's former parts unit, in a separate U.S. bankruptcy.
J.P. Morgan
The automaker was founded in 1908 by William "Billy" Durant, who bought more than 20 car companies before being ousted in a 1920 bailout by Pierre Du Pont and J.P. Morgan.
By the 1960s, GM controlled more than half the U.S. vehicle market. In 2008, it sold only 8.35 million cars worldwide, losing its place as the world's biggest automaker to Toyota Motor Corp. as customers opted for the Japanese carmaker's fuel- efficient Corolla and Camry brands instead of GM's light trucks and Hummers.
GM will introduce several vehicles in 2009 and 2010, the company said, including the Chevrolet Camaro, the Buick LaCrosse, the Cadillac SRX and CTS Sport Wagon, the Chevy Equinox and the Chevy Cruze, GM's "new global compact car."
Also scheduled for production is the Chevy Volt, "an extended-range electric vehicle that can travel up to 40 miles on battery power alone with the extended-range capability of more than 300 total miles," the company said.
Delphi Deal
Yesterday's filing will trigger credit-default swaps protecting about $3.1 billion of GM debt, in the biggest settlement of the derivatives since September's collapse of Lehman Brothers. Pricing reflected the risks last week as dealers charged about $8.7 million upfront and $500,000 annually to protect $10 million of debt.
Banks such as JPMorgan Chase & Co. secured GM's revolving loan of about $4.5 billion with inventory, receivables and factories, also providing a $1.5 billion term loan.
The automaker agreed to buy back ownership of Delphi plants in Wyoming, Michigan; Lockport and Rochester, New York; and Kokomo, Indiana, according to a Delphi statement yesterday.
The requests approved by Gerber include permission for GM to honor vehicle warranties and dealer-incentive programs, the company said in a statement. GM said it also won approval to meet obligations to employees and retirees as well as fulfill financing agreements and pay "essential suppliers."
Deadline
The judge said objections to the sale must be filed by June 19 and set a deadline of June 22 for competing bids.
Gerber also presides over the bankruptcies of Lyondell Chemical Co. and BearingPoint Inc. He handled the Adelphia Communications Corp. and Global Crossing Ltd. cases as well.
"The gravity of the circumstances cannot be overstated," GM said in court papers. "The business and assets to be transferred are extremely sensitive and will be subject to major value erosion unless they are quickly sold and transferred to New GM."
The case is In re General Motors Corp., 09-50026, U.S. Bankruptcy Court, Southern District, New York (Manhattan).
GM Bankruptcy Judge Approves Asset Sale on First Day (Update2)
By Linda Sandler, Chris Scinta, Bob Van Voris and Jeff Green
June 2 (Bloomberg) -- General Motors Corp. won court approval on its first day in bankruptcy to sell its best assets next month to a streamlined entity it plans to use to compete in world markets with the help of $65 billion in government loans.
The automaker, the largest manufacturer to seek protection from creditors, also won permission yesterday from Judge Robert Gerber in Manhattan to draw $15 billion from a $33.3 billion bankruptcy loan. GM today said it has an agreement with an unidentified buyer for its Hummer sport-utility vehicle unit.
Detroit-based GM plans to form a new company in 60 to 90 days, built around its Cadillac, Chevrolet, Buick and GMC brands in the U.S. The lead bidder for the assets is the U.S. Treasury, which will provide the 100-year-old company with billions in loans that would be converted into a 60 percent equity stake.
"There's only one prospective purchaser," GM attorney Harvey Miller told Gerber, referring to the U.S. government's offer for the new GM. "There's no entity that has the wherewithal to bid in these cases."
The automaker missed yesterday's deadline to show the U.S. government it could reorganize without court protection, reporting $172.8 billion in debt -- more than twice the listed value of its assets.
The filing was a "defining moment in the reinvention of GM," said Fritz Henderson, president and chief executive officer of the carmaker. "The economic crisis has caused enormous disruption in the auto industry."
Defining Moment
One idle GM facility in the U.S. will be retooled to make small, fuel-efficient cars as part of an agreement with union workers, GM said May 29. Under the deal to sell Hummer announced today, the identity of the buyer and financial terms aren't yet being disclosed.
GM's Saab unit is reorganizing in Sweden. The German government picked Magna International Inc., a Canadian car-parts maker, as the preferred bidder to buy the company's Opel unit.
The GM Chapter 11 petition makes the carmaker's reorganization the third-largest bankruptcy in U.S. history, ranked by total assets listed in the initial filing, after Lehman Brothers Holdings Inc. and WorldCom Inc.
"This is a step they should have taken more than a year ago, which could have put them in much better shape," said Stephen Pope, chief global strategist at Cantor Fitzgerald in London.
GM listed in its petition as top creditors Wilmington Trust Co., representing bondholders owed $22.8 billion; United Auto Workers, owed $20.6 billion; and Deutsche Bank AG, representing bondholders owed $4.44 billion. The Unofficial GM Dealers Committee, which said it represents more than 6,000 U.S. GM dealers, filed a notice that it will take part in the case.
Chrysler's Filing
Before declaring bankruptcy, GM received $20.57 billion in U.S. Treasury loans, according to court filings. Administration officials said yesterday the government would advance $30 billion more, with another $9.5 billion from the Canadian government. The GM board authorized borrowing as much as $65 billion.
"GM and its stakeholders have produced a viable, achievable plan that will give this iconic American company a chance to rise again," President Barack Obama said yesterday. The government was becoming a "reluctant" owner of the automaker, Obama said, adding that his goal was to "take a hands-off approach and get out quickly."
GM said yesterday that the new company would have total debt of $17 billion, excluding liabilities such as a workers' health-care trust. The filing said the loan total from the U.S. and Canadian government could grow to as much as $65 billion.
Equity Share
Chrysler LLC, the automaker that filed for bankruptcy April 30, listed $39 billion in assets in its petition. The Auburn Hills, Michigan-based carmaker plans to transfer most of its assets to a new entity run by Italy's Fiat SpA. Another bankruptcy judge in New York approved that deal May 31.
Aside from the U.S. government's equity share, GM's statement called for a worker health-care fund to get a 17.5 percent stake and the Canadian government to take 11.7 percent. Bondholders would be eligible for 10 percent and warrants to buy another 15 percent.
There would be no initial public trading of the shares, some of which will be given to the Canadian government in exchange for loans, an administration official said last week. The company might remain private for as long as 18 months, said the official, who asked not to be identified.
Because of its size, GM faces more obstacles than Chrysler in resolving creditor claims that remain in bankruptcy after the new company is created. Reeling from almost $88 billion in losses since 2004, GM may not return to profitability if U.S. vehicle sales are below 10 million a year, an amount the government said a new GM will need to break even.
Speedy Sale
GM filed a request to sell most of its assets to a Treasury-sponsored entity that will hold the government's stake in the company. GM's board of directors said in court papers that an asset sale to the Treasury is "expedient."
Of the government funding, "approximately" $30.1 billion in new money will be advanced by the Treasury, according to the filing.
GM's Saturn LLC and Saturn Distribution Corp. also sought court protection yesterday. The Chapter 11 petitions are the "only opportunity for preserving" the Saturn brand, according to the filings.
"Just a couple of months ago, it was predicted by some that a bankruptcy filing by GM would inevitably lead to its demise," said Lynn Hiestand, a lawyer specializing in restructuring with Skadden, Arps, Slate, Meagher & Flom LLP. "That remains to be seen." Hiestand's firm represents Delphi Corp., GM's former parts unit, in a separate U.S. bankruptcy.
J.P. Morgan
The automaker was founded in 1908 by William "Billy" Durant, who bought more than 20 car companies before being ousted in a 1920 bailout by Pierre Du Pont and J.P. Morgan.
By the 1960s, GM controlled more than half the U.S. vehicle market. In 2008, it sold only 8.35 million cars worldwide, losing its place as the world's biggest automaker to Toyota Motor Corp. as customers opted for the Japanese carmaker's fuel- efficient Corolla and Camry brands instead of GM's light trucks and Hummers.
GM will introduce several vehicles in 2009 and 2010, the company said, including the Chevrolet Camaro, the Buick LaCrosse, the Cadillac SRX and CTS Sport Wagon, the Chevy Equinox and the Chevy Cruze, GM's "new global compact car."
Also scheduled for production is the Chevy Volt, "an extended-range electric vehicle that can travel up to 40 miles on battery power alone with the extended-range capability of more than 300 total miles," the company said.
Delphi Deal
Yesterday's filing will trigger credit-default swaps protecting about $3.1 billion of GM debt, in the biggest settlement of the derivatives since September's collapse of Lehman Brothers. Pricing reflected the risks last week as dealers charged about $8.7 million upfront and $500,000 annually to protect $10 million of debt.
Banks such as JPMorgan Chase & Co. secured GM's revolving loan of about $4.5 billion with inventory, receivables and factories, also providing a $1.5 billion term loan.
The automaker agreed to buy back ownership of Delphi plants in Wyoming, Michigan; Lockport and Rochester, New York; and Kokomo, Indiana, according to a Delphi statement yesterday.
The requests approved by Gerber include permission for GM to honor vehicle warranties and dealer-incentive programs, the company said in a statement. GM said it also won approval to meet obligations to employees and retirees as well as fulfill financing agreements and pay "essential suppliers."
Deadline
The judge said objections to the sale must be filed by June 19 and set a deadline of June 22 for competing bids.
Gerber also presides over the bankruptcies of Lyondell Chemical Co. and BearingPoint Inc. He handled the Adelphia Communications Corp. and Global Crossing Ltd. cases as well.
"The gravity of the circumstances cannot be overstated," GM said in court papers. "The business and assets to be transferred are extremely sensitive and will be subject to major value erosion unless they are quickly sold and transferred to New GM."
The case is In re General Motors Corp., 09-50026, U.S. Bankruptcy Court, Southern District, New York (Manhattan).
By Linda Sandler, Chris Scinta, Bob Van Voris and Jeff Green
June 2 (Bloomberg) -- General Motors Corp. won court approval on its first day in bankruptcy to sell its best assets next month to a streamlined entity it plans to use to compete in world markets with the help of $65 billion in government loans.
The automaker, the largest manufacturer to seek protection from creditors, also won permission yesterday from Judge Robert Gerber in Manhattan to draw $15 billion from a $33.3 billion bankruptcy loan. GM today said it has an agreement with an unidentified buyer for its Hummer sport-utility vehicle unit.
Detroit-based GM plans to form a new company in 60 to 90 days, built around its Cadillac, Chevrolet, Buick and GMC brands in the U.S. The lead bidder for the assets is the U.S. Treasury, which will provide the 100-year-old company with billions in loans that would be converted into a 60 percent equity stake.
"There's only one prospective purchaser," GM attorney Harvey Miller told Gerber, referring to the U.S. government's offer for the new GM. "There's no entity that has the wherewithal to bid in these cases."
The automaker missed yesterday's deadline to show the U.S. government it could reorganize without court protection, reporting $172.8 billion in debt -- more than twice the listed value of its assets.
The filing was a "defining moment in the reinvention of GM," said Fritz Henderson, president and chief executive officer of the carmaker. "The economic crisis has caused enormous disruption in the auto industry."
Defining Moment
One idle GM facility in the U.S. will be retooled to make small, fuel-efficient cars as part of an agreement with union workers, GM said May 29. Under the deal to sell Hummer announced today, the identity of the buyer and financial terms aren't yet being disclosed.
GM's Saab unit is reorganizing in Sweden. The German government picked Magna International Inc., a Canadian car-parts maker, as the preferred bidder to buy the company's Opel unit.
The GM Chapter 11 petition makes the carmaker's reorganization the third-largest bankruptcy in U.S. history, ranked by total assets listed in the initial filing, after Lehman Brothers Holdings Inc. and WorldCom Inc.
"This is a step they should have taken more than a year ago, which could have put them in much better shape," said Stephen Pope, chief global strategist at Cantor Fitzgerald in London.
GM listed in its petition as top creditors Wilmington Trust Co., representing bondholders owed $22.8 billion; United Auto Workers, owed $20.6 billion; and Deutsche Bank AG, representing bondholders owed $4.44 billion. The Unofficial GM Dealers Committee, which said it represents more than 6,000 U.S. GM dealers, filed a notice that it will take part in the case.
Chrysler's Filing
Before declaring bankruptcy, GM received $20.57 billion in U.S. Treasury loans, according to court filings. Administration officials said yesterday the government would advance $30 billion more, with another $9.5 billion from the Canadian government. The GM board authorized borrowing as much as $65 billion.
"GM and its stakeholders have produced a viable, achievable plan that will give this iconic American company a chance to rise again," President Barack Obama said yesterday. The government was becoming a "reluctant" owner of the automaker, Obama said, adding that his goal was to "take a hands-off approach and get out quickly."
GM said yesterday that the new company would have total debt of $17 billion, excluding liabilities such as a workers' health-care trust. The filing said the loan total from the U.S. and Canadian government could grow to as much as $65 billion.
Equity Share
Chrysler LLC, the automaker that filed for bankruptcy April 30, listed $39 billion in assets in its petition. The Auburn Hills, Michigan-based carmaker plans to transfer most of its assets to a new entity run by Italy's Fiat SpA. Another bankruptcy judge in New York approved that deal May 31.
Aside from the U.S. government's equity share, GM's statement called for a worker health-care fund to get a 17.5 percent stake and the Canadian government to take 11.7 percent. Bondholders would be eligible for 10 percent and warrants to buy another 15 percent.
There would be no initial public trading of the shares, some of which will be given to the Canadian government in exchange for loans, an administration official said last week. The company might remain private for as long as 18 months, said the official, who asked not to be identified.
Because of its size, GM faces more obstacles than Chrysler in resolving creditor claims that remain in bankruptcy after the new company is created. Reeling from almost $88 billion in losses since 2004, GM may not return to profitability if U.S. vehicle sales are below 10 million a year, an amount the government said a new GM will need to break even.
Speedy Sale
GM filed a request to sell most of its assets to a Treasury-sponsored entity that will hold the government's stake in the company. GM's board of directors said in court papers that an asset sale to the Treasury is "expedient."
Of the government funding, "approximately" $30.1 billion in new money will be advanced by the Treasury, according to the filing.
GM's Saturn LLC and Saturn Distribution Corp. also sought court protection yesterday. The Chapter 11 petitions are the "only opportunity for preserving" the Saturn brand, according to the filings.
"Just a couple of months ago, it was predicted by some that a bankruptcy filing by GM would inevitably lead to its demise," said Lynn Hiestand, a lawyer specializing in restructuring with Skadden, Arps, Slate, Meagher & Flom LLP. "That remains to be seen." Hiestand's firm represents Delphi Corp., GM's former parts unit, in a separate U.S. bankruptcy.
J.P. Morgan
The automaker was founded in 1908 by William "Billy" Durant, who bought more than 20 car companies before being ousted in a 1920 bailout by Pierre Du Pont and J.P. Morgan.
By the 1960s, GM controlled more than half the U.S. vehicle market. In 2008, it sold only 8.35 million cars worldwide, losing its place as the world's biggest automaker to Toyota Motor Corp. as customers opted for the Japanese carmaker's fuel- efficient Corolla and Camry brands instead of GM's light trucks and Hummers.
GM will introduce several vehicles in 2009 and 2010, the company said, including the Chevrolet Camaro, the Buick LaCrosse, the Cadillac SRX and CTS Sport Wagon, the Chevy Equinox and the Chevy Cruze, GM's "new global compact car."
Also scheduled for production is the Chevy Volt, "an extended-range electric vehicle that can travel up to 40 miles on battery power alone with the extended-range capability of more than 300 total miles," the company said.
Delphi Deal
Yesterday's filing will trigger credit-default swaps protecting about $3.1 billion of GM debt, in the biggest settlement of the derivatives since September's collapse of Lehman Brothers. Pricing reflected the risks last week as dealers charged about $8.7 million upfront and $500,000 annually to protect $10 million of debt.
Banks such as JPMorgan Chase & Co. secured GM's revolving loan of about $4.5 billion with inventory, receivables and factories, also providing a $1.5 billion term loan.
The automaker agreed to buy back ownership of Delphi plants in Wyoming, Michigan; Lockport and Rochester, New York; and Kokomo, Indiana, according to a Delphi statement yesterday.
The requests approved by Gerber include permission for GM to honor vehicle warranties and dealer-incentive programs, the company said in a statement. GM said it also won approval to meet obligations to employees and retirees as well as fulfill financing agreements and pay "essential suppliers."
Deadline
The judge said objections to the sale must be filed by June 19 and set a deadline of June 22 for competing bids.
Gerber also presides over the bankruptcies of Lyondell Chemical Co. and BearingPoint Inc. He handled the Adelphia Communications Corp. and Global Crossing Ltd. cases as well.
"The gravity of the circumstances cannot be overstated," GM said in court papers. "The business and assets to be transferred are extremely sensitive and will be subject to major value erosion unless they are quickly sold and transferred to New GM."
The case is In re General Motors Corp., 09-50026, U.S. Bankruptcy Court, Southern District, New York (Manhattan).
THE GM STORM CLOUD (MINI BLACK HOLE)
Volumes could be written about General Motors, dubbed recently Govt Motors. The trampling of their bondholders is well covered. Their executives just requested $15 billion for walking around money during the bankruptcy hearing that began on Monday. Actually it is for continued operating costs. So AIG is the basket case 'Ward of the State' in the financial sector. So Fannie Mae is the basket case 'Ward of the State' in the mortgage & housing sector. Now General Motors is the basket case 'Ward of the State' in the industrial sector. Here is a wrinkle that few have considered. The issue arose in the 2005 near death experience suffered by GM. To confuse matters, the GM corporate bond resolution might cause a firestorm. My guess is that 5x the volume of CDSwaps are in circulation to insure against default of their outstanding corporate bonds true volume. The orderly resolution of CDSwaps might cause a powerful unwanted rally in GM bonds, even though dead. An embarrassing situation perhaps is coming. The resolution of Lehman Brothers corporate bonds was highly disruptive. GM has much greater debt volume, $172.81 billion to be exact. Since 2005, authorities have attempted to let GM bonds expire and roll over into more controllable securities. It could become wild.
GM is to emerge from the restructure process much smaller company, geared to selling much less profitable smaller cars. The United Auto Worker members are still attached to the USGovt umbilical line, with cost. The new & improved Govt Motors will be peddling a $40k electric hybrid called the Volt, while Toyota continues its production of the $20k electric hybrid Prius. Can anyone detect a price and experience differential in the financial transmission? Anyone who has any knowledge of competition head to head against government-run businesses should see the prospect of unexpected future losses of great magnitude at Govt Motors. Competing against high level bureaucrats who crowd executive offices is an easy prospect. Not to be dismissed, the USGovt is certain to order huge fleet purchases.
The nation would be better served by giving every GM worker a $120k cash grant designed to assist widespread business startups, like bankruptcy counseling, import-export firms, internet software ventures, math-science tutoring, landscape services, security for abandoned empty homes, tent city planning, migrant farm worker agencies, even lemonade stands. If 10% of new business ventures grew into viable businesses, that movement would easily eclipse the Govt Motors rebirth initiative. The costs this year and next year to General Motors will be staggering, whose estimates are way too low. The nation is obsessed with supporting failed businesses, starting with Wall Street banks, and now with industry in the heartland.
Volumes could be written about General Motors, dubbed recently Govt Motors. The trampling of their bondholders is well covered. Their executives just requested $15 billion for walking around money during the bankruptcy hearing that began on Monday. Actually it is for continued operating costs. So AIG is the basket case 'Ward of the State' in the financial sector. So Fannie Mae is the basket case 'Ward of the State' in the mortgage & housing sector. Now General Motors is the basket case 'Ward of the State' in the industrial sector. Here is a wrinkle that few have considered. The issue arose in the 2005 near death experience suffered by GM. To confuse matters, the GM corporate bond resolution might cause a firestorm. My guess is that 5x the volume of CDSwaps are in circulation to insure against default of their outstanding corporate bonds true volume. The orderly resolution of CDSwaps might cause a powerful unwanted rally in GM bonds, even though dead. An embarrassing situation perhaps is coming. The resolution of Lehman Brothers corporate bonds was highly disruptive. GM has much greater debt volume, $172.81 billion to be exact. Since 2005, authorities have attempted to let GM bonds expire and roll over into more controllable securities. It could become wild.
GM is to emerge from the restructure process much smaller company, geared to selling much less profitable smaller cars. The United Auto Worker members are still attached to the USGovt umbilical line, with cost. The new & improved Govt Motors will be peddling a $40k electric hybrid called the Volt, while Toyota continues its production of the $20k electric hybrid Prius. Can anyone detect a price and experience differential in the financial transmission? Anyone who has any knowledge of competition head to head against government-run businesses should see the prospect of unexpected future losses of great magnitude at Govt Motors. Competing against high level bureaucrats who crowd executive offices is an easy prospect. Not to be dismissed, the USGovt is certain to order huge fleet purchases.
The nation would be better served by giving every GM worker a $120k cash grant designed to assist widespread business startups, like bankruptcy counseling, import-export firms, internet software ventures, math-science tutoring, landscape services, security for abandoned empty homes, tent city planning, migrant farm worker agencies, even lemonade stands. If 10% of new business ventures grew into viable businesses, that movement would easily eclipse the Govt Motors rebirth initiative. The costs this year and next year to General Motors will be staggering, whose estimates are way too low. The nation is obsessed with supporting failed businesses, starting with Wall Street banks, and now with industry in the heartland.
The Present And Future Of GM
This week, auto giant General Motors (GM) followed Chrysler and filed for Chapter 11 bankruptcy, making it the fourth largest U.S. company to ever take such a step. As a result of the pre-packaged bankruptcy plan, the U.S. government will own a 60 percent stake in GM, with the United Auto Workers (UAW) receiving 17.5 percent, the Canadian government taking 12.5 percent, and GM's unsecured bondholders taking 10 percent. In order to finance its bankruptcy, "the fallen icon of American industry will rely on $30 billion of additional financial assistance from the Treasury Department and $9.5 billion from Canada," which is in addition to the $20 billion GM had previously received in low interest loans from the Bush administration. As the American Prospect's Harold Meyerson put it, government investment "was simply the one course available to avert an economic holocaust in the Midwest (not just in Michigan but in Ohio, Indiana, and other states as well) that would plunge the nation deeper into recession." Of course, this hasn't stopped conservatives from claiming that the bankruptcy plan puts the U.S. "on the road toward socialism."
WHY BANKRUPTCY NOW?: In an interview Tuesday with Fox News's Greta Van Susteren, Vice President Cheney admitted that the Bush administration deliberately decided to pass the buck on GM, giving the company a bridge loan and then leaving the problem for Obama. Other prominent Republicans, like Republican National Committee chairman Michael Steele, responded to Obama's plan by saying that the company should simply "go into the market, they work out their situation in the market." But the Obama administration's packaged bankruptcy makes sense for both GM and the country's economic stability. Without the government financing its bankruptcy, GM "would have ended up in liquidation, shedding 60,000 hourly jobs instead of 20,000" and selling assets at firesale prices. And as the New Republic's Jonathan Cohn wrote, "the pain wouldn't have stopped there. It would have spread to GM's suppliers and, eventually, to all of the communities where these workers spend money." By delaying bankruptcy, the administration was able to announce that it would back GM's warranties, set plans to close dealerships, allow suppliers time to diversify, and work out a deal to ensure that autoworkers received some of the benefits and pensions that they earned. As economist Dean Baker explained, "back in December and January, when none of these pieces were in place, there was still enough up in the air that I think it would have been reckless to have done a bankruptcy."
THE PLIGHT OF THE BONDHOLDERS: A favorite conservative reaction to the GM bankruptcy has been to claim that it unfairly benefits unions and violates the rights of GM's bondholders. A group of Republican House members said that "the proposal seems to favor the rights and claims of the UAW, a political ally of the current administration...over the rights and claims of the company's diverse group of bondholders." Some have even gone so far as to claim that the administration's plan is illegal. Rep. Eric Cantor (R-VA) said that "the White House [is] coming in and favoring the UAW, basically making the rights of the bondholders inferior, outside any kind of legal framework whatsoever. There has been a downright suspension of the law." But, as the Washington Post noted, "[T]here are a number of precedents for retiree health funds getting preferential treatment during bankruptcies, particularly in the steel industry in recent years." It's also likely that the GM bondholders would get no more in liquidation than they are getting under the current plan, which may be why a majority of bondholders (54 percent) support the plan. And as for the claims of illegality, Reuters's Felix Salmon pointed out that an unsecured bondholder "has no 'legal right' to get exactly the same outcome as any other creditor." "[I]f the bondholders have a better idea of what's fair, they're more than welcome to provide tens of billions of dollars in debtor-in-possession financing in order to make that happen. But of course they're not willing to put in so much as a nickel, which means that it's not up to them," Salmon wrote.
A RESPONSIBLE EXIT STRATEGY: House Minority Leader John Boehner (R-OH) responded to the GM plan by saying "the only thing it makes clear is that the government is firmly in the business of running companies using taxpayer dollars." However, according to the New York Times, "[A] quick restructuring appears possible" precisely because of the agreements brokered by the administration with the union and GM's bondholders. As Obama said, "GM will be run by a private board of directors and management team with a track record in American manufacturing that reflects a commitment to innovation and quality. They -- and not the government -- will call the shots and make the decisions about how to turn this company around." Reuters noted that the administration has "created safeguards to prevent interference, including prohibiting government officials from sitting on the firm's board or working for firms in which the automaker invests." Steve Rattner, head of the Obama administration's auto task force, said that GM's shares will be sold off in a series of transactions over the next 12 to 18 months in order "to maximize the return" for taxpayers. "Obviously we could exit tomorrow if we wanted to by handing out shares at the corner of Pennsylvania and 17th or selling them for a dollar, but we have a huge amount of taxpayer money here," Rattner said. "But while we want to exit as soon as possible, we also want to exit as soon as practicable in terms of being good custodians of the taxpayers' money."
This week, auto giant General Motors (GM) followed Chrysler and filed for Chapter 11 bankruptcy, making it the fourth largest U.S. company to ever take such a step. As a result of the pre-packaged bankruptcy plan, the U.S. government will own a 60 percent stake in GM, with the United Auto Workers (UAW) receiving 17.5 percent, the Canadian government taking 12.5 percent, and GM's unsecured bondholders taking 10 percent. In order to finance its bankruptcy, "the fallen icon of American industry will rely on $30 billion of additional financial assistance from the Treasury Department and $9.5 billion from Canada," which is in addition to the $20 billion GM had previously received in low interest loans from the Bush administration. As the American Prospect's Harold Meyerson put it, government investment "was simply the one course available to avert an economic holocaust in the Midwest (not just in Michigan but in Ohio, Indiana, and other states as well) that would plunge the nation deeper into recession." Of course, this hasn't stopped conservatives from claiming that the bankruptcy plan puts the U.S. "on the road toward socialism."
WHY BANKRUPTCY NOW?: In an interview Tuesday with Fox News's Greta Van Susteren, Vice President Cheney admitted that the Bush administration deliberately decided to pass the buck on GM, giving the company a bridge loan and then leaving the problem for Obama. Other prominent Republicans, like Republican National Committee chairman Michael Steele, responded to Obama's plan by saying that the company should simply "go into the market, they work out their situation in the market." But the Obama administration's packaged bankruptcy makes sense for both GM and the country's economic stability. Without the government financing its bankruptcy, GM "would have ended up in liquidation, shedding 60,000 hourly jobs instead of 20,000" and selling assets at firesale prices. And as the New Republic's Jonathan Cohn wrote, "the pain wouldn't have stopped there. It would have spread to GM's suppliers and, eventually, to all of the communities where these workers spend money." By delaying bankruptcy, the administration was able to announce that it would back GM's warranties, set plans to close dealerships, allow suppliers time to diversify, and work out a deal to ensure that autoworkers received some of the benefits and pensions that they earned. As economist Dean Baker explained, "back in December and January, when none of these pieces were in place, there was still enough up in the air that I think it would have been reckless to have done a bankruptcy."
THE PLIGHT OF THE BONDHOLDERS: A favorite conservative reaction to the GM bankruptcy has been to claim that it unfairly benefits unions and violates the rights of GM's bondholders. A group of Republican House members said that "the proposal seems to favor the rights and claims of the UAW, a political ally of the current administration...over the rights and claims of the company's diverse group of bondholders." Some have even gone so far as to claim that the administration's plan is illegal. Rep. Eric Cantor (R-VA) said that "the White House [is] coming in and favoring the UAW, basically making the rights of the bondholders inferior, outside any kind of legal framework whatsoever. There has been a downright suspension of the law." But, as the Washington Post noted, "[T]here are a number of precedents for retiree health funds getting preferential treatment during bankruptcies, particularly in the steel industry in recent years." It's also likely that the GM bondholders would get no more in liquidation than they are getting under the current plan, which may be why a majority of bondholders (54 percent) support the plan. And as for the claims of illegality, Reuters's Felix Salmon pointed out that an unsecured bondholder "has no 'legal right' to get exactly the same outcome as any other creditor." "[I]f the bondholders have a better idea of what's fair, they're more than welcome to provide tens of billions of dollars in debtor-in-possession financing in order to make that happen. But of course they're not willing to put in so much as a nickel, which means that it's not up to them," Salmon wrote.
A RESPONSIBLE EXIT STRATEGY: House Minority Leader John Boehner (R-OH) responded to the GM plan by saying "the only thing it makes clear is that the government is firmly in the business of running companies using taxpayer dollars." However, according to the New York Times, "[A] quick restructuring appears possible" precisely because of the agreements brokered by the administration with the union and GM's bondholders. As Obama said, "GM will be run by a private board of directors and management team with a track record in American manufacturing that reflects a commitment to innovation and quality. They -- and not the government -- will call the shots and make the decisions about how to turn this company around." Reuters noted that the administration has "created safeguards to prevent interference, including prohibiting government officials from sitting on the firm's board or working for firms in which the automaker invests." Steve Rattner, head of the Obama administration's auto task force, said that GM's shares will be sold off in a series of transactions over the next 12 to 18 months in order "to maximize the return" for taxpayers. "Obviously we could exit tomorrow if we wanted to by handing out shares at the corner of Pennsylvania and 17th or selling them for a dollar, but we have a huge amount of taxpayer money here," Rattner said. "But while we want to exit as soon as possible, we also want to exit as soon as practicable in terms of being good custodians of the taxpayers' money."
Congress warns on Detroit shake-up plans
US lawmakers are building roadblocks to the rapid restructuring of General Motors and Chrysler, arguing for more time to examine plans to shut the carmakers’ dealerships and plants writeDate( 1244051304000, 'Grey', 'Jun-03', 9999999999999); - Jun-03
GM bankruptcy filing
The US auto giant’s Chapter 11 bankruptcy filing writeDate( 1244099706000, 'Grey', 'Jun-04', 9999999999999); - Jun-04
GM’s adviser will hide in the wings
Restructuring advisers often hide offstage as they counsel high-profile clients who are struggling to survive, and Albert Koch, the new chief restructuring officer of General Motors, adheres to that tradition writeDate( 1244069291000, 'Grey', 'Jun-03', 9999999999999); - Jun-03
Funds to present case over Chrysler
A group of Indiana pension funds fighting Chrysler’s restructuring will present arguments to a federal appeals court, potentially scuttling the carmaker’s plan to finalise an alliance with Italy’s Fiat writeDate( 1244056667000, 'Grey', 'Jun-03', 9999999999999); - Jun-03
US car sales boost mirrors global rise
All major carmakers posted higher sales in the US last month than in April, with heavy discounting boosting even General Motors and Chrysler, which are both in bankruptcy protection writeDate( 1243982259000, 'Grey', 'Jun-02', 9999999999999); - Jun-02
General Motors goes to the garage
Chapter 11 gives chief executive Fritz Henderson room to manoeuvre in stripping down GM’s balance sheet, curbing its healthcare and pension liabilities and closing reluctant dealers. But can he remould GM for the long-term, rather than just foster a cyclical revival, asks John GapperSalutary lessons from the downfall of a carmaker
General Motors, the failing giant was the iconic corporation of the 20th century and introduced many of the industrial practices that were adopted the world over. Yet the factors that had once been the company’s strengths were became its weaknesses, writes John KayWhat a Hummer
The previously unknown Chinese firm that has bought the GM brand will be the subject of a few punchlines, but it may have the last laugh
Russia hopes to get behind the wheel
When Barack Obama announced his decision to shepherd General Motors into bankruptcy, Vladimir Putin, Russian was conducting some car industry business of his own
How Washington blew GM’s bankruptcy
The administration took a tragic situation and turned it into an expensive mess to pay a political debt, needlessly wasting billions of dollars in the process, writes Michael Levine
End of a US era
The US government relied on large companies like GM to provide welfare benefits, and never put in place policies that could ease the post-industrial economic restructuring
Obama can have the Chrysler he wants
In a rather poetic twist, Chrysler is due to exit from Chapter 11 today while General Motors goes into it and Arthur Gonzalez, a New York judge, has written an admirably clear ruling on why he did not accept challenges to the restructuring, says John Gapper
General Motors holds a mirror up to America
US politicians dare not talk openly about industrial adjustment because the public does not want to hear about it, writes Robert Reich
General Motors
If the phrase, ‘end of an era’, has been overused lately, it surely applies in the case of the 100-year-old carmaker
Chinese company to buy Hummer writeDate( 1244011952000, 'Grey', 'Jun-03', 9999999999999); - Jun-03
GM’s China sales set to step up a gear writeDate( 1243993297000, 'Grey', 'Jun-03', 9999999999999); - Jun-03
GM in race to depart Chapter 11 protection writeDate( 1243967421000, 'Grey', 'Jun-02', 9999999999999); - Jun-02
Obama seeks to reassure on GM writeDate( 1243902670000, 'Grey', 'Jun-02', 9999999999999); - Jun-02
Slimmer, healthier Chrysler emerges writeDate( 1243913707000, 'Grey', 'Jun-02', 9999999999999); - Jun-02
Concerns over role of US as investor in GM writeDate( 1243879540000, 'Grey', 'Jun-01', 9999999999999); - Jun-01
Harlem dealership takes its place in history writeDate( 1243876324000, 'Grey', 'Jun-01', 9999999999999); - Jun-01
Struggling Motown loses the beat writeDate( 1243876957000, 'Grey', 'Jun-01', 9999999999999); - Jun-01
Advertising creditors play tense waiting game writeDate( 1243894849000, 'Grey', 'Jun-01', 9999999999999); - Jun-01
Judge approves Chrysler asset sale writeDate( 1243839082000, 'Grey', 'Jun-01', 9999999999999); - Jun-01
Marchionne thwarted as GM calls the shots writeDate( 1243799112000, 'Grey', 'May-31', 9999999999999); - May-31
Wagoner’s GM exit is a blessing in disguise writeDate( 1243786154000, 'Grey', 'May-31', 9999999999999); - May-31
End of an era as lumbering GM crashes writeDate( 1243798509000, 'Grey', 'May-31', 9999999999999); - May-31
GM to file for Chapter 11 protection writeDate( 1243839918000, 'Grey', 'Jun-01', 9999999999999); - Jun-01
US cars force taken to task writeDate( 1243797429000, 'Grey', 'May-31', 9999999999999); - May-31
Car industry’s woes mute jazz festival writeDate( 1243616311000, 'Grey', 'May-29', 9999999999999); - May-29
Fiat pulls out of Opel talks writeDate( 1243597679000, 'Grey', 'May-29', 9999999999999); - May-29
Fiat poised to close deal for Chrysler writeDate( 1243570590000, 'Grey', 'May-29', 9999999999999); - May-29
Hopes rise for fast GM bankruptcy exit writeDate( 1243534671000, 'Grey', 'May-28', 9999999999999); - May-28
Opel talks stall on GM financing demand writeDate( 1243511176000, 'Grey', 'May-28', 9999999999999); - May-28
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