Experts say GM bankruptcy almost inevitable; too much work left with too little time

[babylonsister]

Experts say GM bankruptcy almost inevitable; too much work left with too little time

By TOM KRISHER | Associated Press | 1 hour, 27 minutes ago in Business


For General Motors Corp., the task at hand is so difficult that experts say a Chapter 11 bankruptcy filing is all but inevitable.

To remake itself outside of court, GM must persuade bondholders to swap $27 billion in debt for 10 percent of its risky stock. On top of that, the automaker must work out deals with its union, announce factory closures, cut or sell brands and force hundreds of dealers out of business _ all in three weeks.

"I just don't see how it's possible, given all of the pieces," said Stephen J. Lubben, a professor at Seton Hall University School of Law who specializes in bankruptcy.

GM, which has received $15.4 billion in federal aid, faces a June 1 government deadline to complete its restructuring plan. If it can't finish in time, the company will follow Detroit competitor Chrysler LLC into bankruptcy protection.

Although company executives said last week they would still prefer to restructure out of court, experts say all GM is doing now is lining up majorities of stakeholders to make its court-supervised reorganization move more quickly.

"If we need to pursue bankruptcy, we will make sure that we do it in an expeditious fashion. The exact strategies I'm not getting into today, but we'll be ready to go if that's required," Chief Executive Fritz Henderson said last week.

more...

http://www.newser.com/article/d983jneg2/experts-say-gm-bankruptcy-almost-inevitable-too-much-work-left-with-too-little-time.html

[Fumesucker]

1. No one could have imagined that things might come to this juncture..

Which is why everyone waited until the last moment..

:eyes:

[lib2DaBone]

2. I can understand why GM wants to create Jobs in Mexico with Taxpayer money...

[babylonsister]

5. Google GM and MX and get back to me...

over 35M responses. This has been going on for a long time.


http://www.google.com/#hl=en&q=general+motors+mexico&btnG=Google+Search&aq=0&oq=General+Motors+Mex&fp=ry0_Tod3DXA

[Better Believe It]

3. If President Obama didn't want GM to fold he could extend the deadline

Of course, we all know that already.

[Yupster]

4. If they would make the bondholders a reasonable offer

I think they'd go for it. If they (or the government) offered 50 cents on the dollar I bet they'd get the 90 %.

Here's they offer they made.

Bondholders give up $ 27 billion for 10 % of the stock.
Government gives up $ 10 billion for 50 % of the company.
UAW gives up $ 10 billion for 39 % of the company.
Current stockholders get 1 % of the company.

Since bondholders have priority in bankruptcy the offer is an insult to them. GM has 100,000 individual bondholders who are voting right now. GM says they need 90 % yes vote. Not with that offer they won't get it.

[Better Believe It]

6. Perhaps they won't because their intention is to drive GM into bankruptcy and blame it on bondholder

[blue_onyx]

7. That is the intention

This 2 month period wasn't to come up with a new viability plan or to avoid bankruptcy. It was so GM could get their bankruptcy plans in order. I don't see how GM can accomplish the cuts and reorganization without bankruptcy. For example, they want to get rid of over 40% of their dealers in a year and a half. That's a lot of contracts to break and could be quite expensive....unless they're under bankruptcy protection.