GM to plan for bankruptcy by June 1

[Ashley]

http://www.bizjournals.com/sacramento/stories/2009/04/13/daily1.html

 

General Motors Corp. is apparently preparing to file for bankruptcy by June 1 after being directed to plan for a filing by the U.S. Treasury Department, according to a report Sunday by the New York Times.

 

The Times, quoting unidentified sources, said the Treasury Department has directed officials at General Motors (NYSE: GM) to lay the groundwork for a "surgical" bankruptcy filing that could last as short as a few weeks for portions of the company. Those portions would be the "good" parts of the company, and the "less desirable" parts of the company would remain in court for much longer and possibly be liquidated, according to the Times.

 

The parts of GM that may get bogged down in a lengthy court restructuring or liquidation include the "unwanted brands, factories and health care obligations," sources said in the report.

 

A report in the Wall Street Journal on Sunday said that any attempt at a "quick" bankruptcy for GM could face legal challenges from bondholders of the company.

 

GM has accepted $13.4 billion in federal bailout funds and has asked for at least $16 billion more. However, President Obama rejected GM's initial restructuring plan and forced former chief executive Rick Wagoner to resign before setting a new deadline of the end of May for the company to come up with an acceptable new plan.

 

Fritz Henderson, the new CEO of GM, said last week in an interview on NBC's "Meet the Press" that while GM was not ruling out bankruptcy, it was not inevitable.

 

Chrysler LLC also has accepted billions in government bailout funds, but Ford Motor Co. (NYSE: F) is the only one of the Big Three automakers from Detroit not to take federal funds.

 

On Friday, Standard & Poor's Rating Services lowered its debt ratings for Chrysler and GM, and added that bankruptcy is likely and could lead to the breakup of Chrysler.

 

Standard & Poor's said in its warning that it was lowering the debt ratings because of the increased possibility of bankruptcy if the two automakers don’t meet deadlines set by the Obama administration, according to numerous media reports.

[DTM Brian]

Gm suffers while Hyundai thrives

 

http://abcnews.go.com/Video/playerIndex?id=7312406

[ZappBrannigan]

GM needed to go bankrupt the first time and restructure imo.

[Nitrousbird]

A restructure is needed.

 

Dump GMC, Saab, and Hummer. I wouldn't mind seeing the Hummer branded as a Chevy, though.

 

Dump the Unions. Profit.

[Guest Removed]

hyundia/kia is the 6th largest....bet they make top 5 before to long.

 

guess i better dig out my old gm cert's....may just come in handy. and pick up another tech 2 while im at it..should have never sold my old one

[Dr. Pomade]

Okay, so someone that has a way better grasp on the implications of this tell me - what does GM bankruptcy mean for consumers? Does GM have some kind of liquidation sale (e.g., "ALL THESE CARS MUST GO GO GO! CAMAROS, GET THEM CHEAP! CORVETTES ARE SELLING FOR NOTHING! GET THEM BEFORE THEY'RE ALL GONE!!!11!!!")?

 

Just wondering.

[TTQ B4U]

Gm suffers while Hyundai thrives

 

http://abcnews.go.com/Video/playerIndex?id=7312406

 

No surprise really. We've owned two Honda's, an 03 Accord and an 03 Oddessy. When we bought our most recent van I lined up and compared the Entourage vs the new Oddy 7 different ways to Sunday and even the Honda sales guy and Manager admitted it was going to boil down to resale and perhaps some very minor differences in characteristics.

 

I took the $9,600 delta in price that day vs resale down the road and have been happy ever since. Even my wife admits that after nearly 21k miles, the van is like the day we brought it home and that she has zero regrets having it over another Honda. Jan. gave them an 85% increase in sales of the Sonata. That's fucking huge!

 

They are doing exactly what Honda did only on a more accelerated scale. They came in cheap, turned to affordable and now are going after the next step which is building some very nice cars. They've lead the way with warranty and even the new Assurance plan, both of which were copied by the domestics.

 

Hopefully whatever results from GM and Chryslers woes, they come out being leaders once again.

[kirks5oh]

Okay, so someone that has a way better grasp on the implications of this tell me - what does GM bankruptcy mean for consumers? Does GM have some kind of liquidation sale (e.g., "ALL THESE CARS MUST GO GO GO! CAMAROS, GET THEM CHEAP! CORVETTES ARE SELLING FOR NOTHING! GET THEM BEFORE THEY'RE ALL GONE!!!11!!!")?

 

Just wondering.

 

+1000

 

i'm in the market for a few vehicles at the end of the summer once i get moved and settled in

[,,,,,,comma,,,,,,]

I wish. From what I understand it just means that they would be more government regulated. If they did have a huge liquidation it would be good bye mustangs and hello camaro.

[zeitgeist57]

Depending on the way GM files for bankruptcy, it can mean anything from temporary protection from creditors, to a full-fledged government (Department of Treasury) dissolution of the organization and all assets.

 

Most likely, GM will just file for Chapter 11. This will allow them to set up an INDENTURE (structure of payments to creditors) at a discount of what they currently owe, and then a reorganization once everyone is sufficiently released. The end is a much smaller, much poorer GM, but one with few or no liens and the freedom to re-establish a business model that works. You should still be able to get parts and the warranty would still be honored.

 

The reason this didn't happen sooner is MARKET TIMING. People much smarter than you or I (despite being associated with GM) said to delay any discussions of bankruptcy as long as possible to avoid spooking investors and destroying the market. Does anyone remember the stock market back in February/March? Do you think it would take GM's bankruptcy well?!?

[Kevin R.]

Most likely, GM will just file for Chapter 11.

 

Negative.

 

I did a lot of research on this and what kind of bankruptcy GM is more-likely considering.

 

The kind of bankruptcy they are going after is called a "363" that involves the selling of many of its assets.

 

It’s a sale authorized under the bankruptcy law that requires court approval. It normally starts with a request to the court to approve a set of bidding procedures. That includes the time the bidding has to be submitted, the nature of what has to be sold. 363 sales typically start with what’s always called a stalking horse, which is someone who has agreed to buy the assets on particular terms for a particular price. Then the court starts the counterbidding. In exchange for the chance that it may get outbid, the stalking horse gets a break-up fee and get paid all of its expenses incurred in getting to the table first.

 

So, you most likely will not be able to go pick up a brand new Corvette on the cheap just because of this. As, that is still a valuable asset to GM.

 

The way it sounds, someone has to bid for and buy the assets of GM. The question is who or what entity?

 

The fact they are seeking this type of bankruptcy leaves a lot of questions and confusion, as there is a lot of things you cannot do in a 363 sale. Also, what if there is no "stalking horse", or bidders? Does anyone really want GM?

[kirks5oh]

regardless, people who are truly on the fence as to buy a GM or not, would be nuts to buy a GM product at the current prices given the questionable future in terms of warranty/parts/service

 

that is a fact that should drive the prices down a bit.

 

i'm fairly stuck, as i need a giant SUV (denali XL) with 3 rows and sufficient storage behind the 3rd row for luggage/dog. our exploder isn't big enough and ford is done making the excursion (ugly as fuck btw). its got to be either suburban/denali/escalade--no other company makes a new, comparable product. that, and i'd love a vette

[Kevin R.]

There is a future. They are essentially splitting the company into a bad and good GM is what I was getting at.

 

regardless, people who are truly on the fence as to buy a GM or not, would be nuts to buy a GM product at the current prices given the questionable future in terms of warranty/parts/service

 

that is a fact that should drive the prices down a bit.

 

i'm fairly stuck, as i need a giant SUV (denali XL) with 3 rows and sufficient storage behind the 3rd row for luggage/dog. our exploder isn't big enough and ford is done making the excursion (ugly as fuck btw). its got to be either suburban/denali/escalade--no other company makes a new, comparable product. that, and i'd love a vette

[Dave1647545494]

if it works out right they kick out the unions and unload some over lapping stuff (like gmc and pontiac) and we get more affordable cars

[kirks5oh]

There is a future. They are essentially splitting the company into a bad and good GM is what I was getting at.

 

i know. but in the next 6 months/year, while everyone's waiting to see exactly what will happen, GM and all the dealerships who sell GM's still have to be able to sell cars---you can't just tell everyone to hold on for a year while GM gets their shit together, they still have to move cars off the lots--hopefully at lower prices

[Guest Removed]

Okay, so someone that has a way better grasp on the implications of this tell me - what does GM bankruptcy mean for consumers? Does GM have some kind of liquidation sale (e.g., "ALL THESE CARS MUST GO GO GO! CAMAROS, GET THEM CHEAP! CORVETTES ARE SELLING FOR NOTHING! GET THEM BEFORE THEY'RE ALL GONE!!!11!!!")?

 

Just wondering.

Well it could go the other way john. cars and the parts could go thru the roof.

All certed techs could grab parts for there cost, and take there certs and open there own shop.

 

you know how ford did with the gt and the gt500...that unavailabltiy tax and all

[Kevin R.]

i know. but in the next 6 months/year, while everyone's waiting to see exactly what will happen, GM and all the dealerships who sell GM's still have to be able to sell cars---you can't just tell everyone to hold on for a year while GM gets their shit together, they still have to move cars off the lots--hopefully at lower prices

 

I believe GM would still operate the whole time. However, they would be auctioning off distressed assets leaving the profitable aspects of GM in operation. They do not sound like they plan on halting all production, design, and distribution of their vehicles while this bankruptcy happens. That isn't how a 363 works.

 

EDIT: By assets, I don't mean cars.

[Scotty2Hotty]

Shouldn't have dumped the money in the camaro that most certainly will fail. It's a mute point if they sink to the bottom.

[evan9381]

No surprise really. We've owned two Honda's, an 03 Accord and an 03 Oddessy. When we bought our most recent van I lined up and compared the Entourage vs the new Oddy 7 different ways to Sunday and even the Honda sales guy and Manager admitted it was going to boil down to resale and perhaps some very minor differences in characteristics.

 

I took the $9,600 delta in price that day vs resale down the road and have been happy ever since. Even my wife admits that after nearly 21k miles, the van is like the day we brought it home and that she has zero regrets having it over another Honda. Jan. gave them an 85% increase in sales of the Sonata. That's fucking huge!

 

They are doing exactly what Honda did only on a more accelerated scale. They came in cheap, turned to affordable and now are going after the next step which is building some very nice cars. They've lead the way with warranty and even the new Assurance plan, both of which were copied by the domestics.

 

Hopefully whatever results from GM and Chryslers woes, they come out being leaders once again.

 

i love the saturn commercial with the bald black guy where he talks about "if you lose your job, you have to take your car back"...GM spun that shit so bad, its not funny. you see the hyundai commercial says for the assurance +, if you lose your job, they'll make payments for 3 months, then if youre still without a job after those months, you can still return the car, with no impact to your credit. doesnt say anything about having to bring it back, just says you can

 

i think id rather have that...even if GM covers my payments for 9 months, if im out of a job for 3 months, there may be another problem, and id rather be able to say "here's your car back" then to wait another 6 months, still be unemployed, and have to start paying again because you cant take the car back.

[kirks5oh]

I believe GM would still operate the whole time. However, they would be auctioning off distressed assets leaving the profitable aspects of GM in operation. They do not sound like they plan on halting all production, design, and distribution of their vehicles while this bankruptcy happens. That isn't how a 363 works.

 

EDIT: By assets, I don't mean cars.

 

 

 

i understand, but the public perception will be irreparably damaged. you wouldn't make a major purchase (that will need future service/parts/etc) from a company that was 'filing for bankruptcy' (no matter what your definition of that is), when you could get a comparable product from another company that is thriving. i don't think GM has clearly stated how/if they will honor warranties on new cars if everything goes south--just lots of speculation. why anyone would buy a new pontiac for anywhere near full price right now is completely beyond me.

 

lots of speculation, i know. i'm a hardcore american car buyer--won't buy anything else--but i must admit even i'm hesitant to pull the trigger on a GM, even though there's no other new car that would possibly fit my needs

[Kevin R.]

True.

 

However, I think people automatically think "bankruptcy" and think of a personal bankruptcy. It is totally different for a company, especially one working so closely with our federal government at the moment.

 

Bankruptcy definitely does not mean death in this case. However, my shares I bought for $6.00 will be wiped out.

 

i understand, but the public perception will be irreparably damaged. you wouldn't make a major purchase (that will need future service/parts/etc) from a company that was 'filing for bankruptcy' (no matter what your definition of that is), when you could get a comparable product from another company that is thriving. i don't think GM has clearly stated how/if they will honor warranties on new cars if everything goes south--just lots of speculation. why anyone would buy a new pontiac for anywhere near full price right now is completely beyond me.

 

lots of speculation, i know. i'm a hardcore american car buyer--won't buy anything else--but i must admit even i'm hesitant to pull the trigger on a GM, even though there's no other new car that would possibly fit my needs