GM considering Chapter 11 filing, new company: report

[IDemo]

Source: Reuters

Sat Feb 14, 2009 12:28pm EST

CHICAGO (Reuters) - General Motors Corp, nearing a Tuesday deadline to present a viability plan to the U.S. government, is considering as one option a Chapter 11 bankruptcy filing that would create a new company, the Wall Street Journal said in its Saturday edition.

"One plan includes a Chapter 11 filing that would assemble all of GM's viable assets, including some U.S. brands and international operations, into a new company," the newspaper said. "The undesirable assets would be liquidated or sold under protection of a bankruptcy court. Contracts with bondholders, unions, dealers and suppliers would also be reworked."

Citing "people familiar with the matter," the story said that GM could also ask for additional government funds to stave off a bankruptcy filing.

GM declined to comment, the story said.

Read more: http://www.reuters.com/article/topNews/idUSTRE51D1Q120090214

[jody]

1. That would dump its obligations to retirees on taxpayers. What's good for GM is good for the People.

:sarcasm:

[Kolesar]

4. Cannot dump pension benefits under Ch11, and I doubt about health care benefits

Do you recall that GM has been funding a trust to fund the future obligations of health care benefits for retirees? They started about a year ago.

[jody]

9. I thought PBGC absorbed pensions at Lehman Brothers under Chapter 11, see link below?

PBGC Moves to Protect Pensions at Lehman Brothers Holdings Inc.

"Lehman's problems became evident earlier this year amid tightening credit markets and the loss of liquidity. Unable to borrow cash to maintain operations, the firm filed for Chapter 11 protection in the U.S. Bankruptcy Court in Manhattan on Sept. 15. On Sept. 20 the court approved the sale of substantially all of Lehman Brothers' capital markets and investment banking operations to Barclays Capital Inc. for $1.75 billion."

[Abq_Sarah]

13. That's not quite accurate

Under chapter 11, they can restructure the pension plan and people can end up receiving less than they were promised. GM is currently underfunded by 31 billion according to the Pension Benefit Guaranty Corp. Under Chap 11, they could be conceivably ordered to continue funding the plan or the government takes the hit. I suspect they would be told to fund the existing pension plan and cuts would come from healthcare and wages. They also need to kill unprofitable lines and vehicles.

[Hawkeye-X]

16. Agreed. Take out the Hummers and the SUV models..

Stick with sedans & coupes, hybrids. Both my parents own GM products (Cadillac) and I can see how much shoddy work was involved in it.

They are not happy with it either, so they are going to select a different model when they have paid off the car (Dad's lease is up next month and he's already car hunting - he's paying over $500 in lease for his mini-SUV)

Smaller cars are more efficient if done right, and guess the braindead morons of GM hasn't figured that out yet.

Chevy Volt? Ha. Never gonna happen. They need something better. Hire somebody from Toyota/Honda braintrust to help redesign their cars...

Hawkeye-X

[Abq_Sarah]

19. The SUV models are fairly profitable

Especially in states like mine where the majority of roads are unpaved. Mountain states and regions that receive a large amount of snow have a valid need for SUVs and trucks.

What we need is better and more efficient hybrid light trucks and SUVs.

[blue_onyx]

20. Volt never gonna happen?

Sure... :eyes:

Toyota/Honda design the most boring looking cars ever. Definitely not the direction GM needs to go in. The Volt is a great looking car and will be a big success.

[tabasco]

23. Anybody who gives a shit what a vehicle looks like is part of the problem.

A machine is designed to perform a function.

I judge a vehicle by how well it performs the function.

It is stupid to give a damn how the machine looks.

I don't need a machine to be an extension of myself.

I consider people who think like that to be stupid.

[blue_onyx]

25. Well, consider yourself part of the minority because...

NOBODY goes into a showroom to purchase a vehicle and doesn't care about appearance. Appearance may not be the most important characteristic but it is one attribute a consumer considers when making a purchase. A company could sell the best functioning, most reliable vehicle and if it looks like crap, it won't sell. There's a reasons companies spend billions on the design of products.

[CRF450]

28. Hells yeah!!

To add to that. The prius may seem to be selling alot, but compared to other new cars or trucks as a whole its a VERY small percentage compared to the others. On that note, I would never own a pruis, they're slow, ugly, handle like shit just like any other econo cars. Most people dont want a pruis. As long as the car averages 20mpg or more, I'll take looks and overall driving experience over strickly high fuel milage any day! Thats the reason I drive a high powered sports car.

[tabasco]

39. "A company could sell the best functioning, most reliable vehicle and if it looks like crap,

it won't sell."

Millions of Honda Civics and Toyota Corrolas sold pretty well.

[DainBramaged]

44. And we think that those of you who think form doesn't follow function are just as stupid

Your life must be totally boring. I guess you aren't impressed by art? Don't answer, I'm one of your 'stupid' ones.

[DainBramaged]

35. Really, why doesn't Toyota and Honda and Nissan "take out" the

gas hogs and SUV's? Aren't the Japanese brain dead for making them? Or don't you believe they don't make gas pigs either?


Ignorance and blindness, two traits that seem to be common among the 'experts' at DU.

[DainBramaged]

46. These FOREIGN vehicles ALL get the SAME, similar or worse millage as a Hummer?

Don't they deserve your scorn too???????? Of course not, if it's made in America you'e biased. Why do you hate America?

Toyota Sequoia
Toyota Land Cruiser
Toyota FJ Cruiser
Toyota Highlander
Toyota Tundra

Nissan Armada
Nissan Titan

Lexus GX and LX

Honda Ridgeline
Honda Odyssey
Honda Pilot

Mercedes-Benz G55 AMG
Mercedes-Benz ML63 AMG
Mercedes-Benz SL65 AMG
Mercedes-Benz GL550 SUV
Mercedes-Benz G500 SUV
Mercedes-Benz SLR McLaren Roadster

Bentley (all)

Ferrari (all)

Porsche (all)



Well?

[ChromeFoundry]

51. Excellent point. n/t

[jody]

17. I believe PBGC has debts over $11 billion and that could increase with the bankruptcies. Congress

almost certainly will give PBGC as much money as it needs to cover retiree programs.

[Kolesar]

29. Pensioners might get "crammed down" but they won't lose everything

because there is a pension fund that covers most of the obligations. Highly paid pensioners will have their benefits "capped" to a modest pension-salary. thank you

[jody]

30. Is GM's retirement funds protected by PBGC? My posts assumed they were but I have not been able to

confirm my assertion.

[Kolesar]

31. More broadly than PBGC, pension benefits are protected by federal law

My grandfather and many in my hometown lost everything when the Steel Car Company closed and had an "unfunded" pension. Hence, the requirements to fund the pension/trusts.

[jody]

32. If as you say, "pension benefits are protected by federal law" then why have PBGC? Isn't PBGC an

insurance program that protects at least some of a retiree's benefits whereas any other federal funds for that service would require future congressional authorization and appropriation of funds?

"PBGC is a federal corporation created by the Employee Retirement Income Security Act of 1974. It currently protects the pensions of nearly 44 million American workers and retirees in more than 29,000 private single-employer and multiemployer defined benefit pension plans. PBGC receives no funds from general tax revenues. Operations are financed by insurance premiums set by Congress and paid by sponsors of defined benefit plans, investment income, assets from pension plans trusteed by PBGC, and recoveries from the companies formerly responsible for the plans."

[DainBramaged]

36. What happened to the steelworkers when the steel companies went belly up

they got SCREWED.

[llmart]

21. Oh, you are terribly wrong about that......

It's been done before by other large companies. Happened to my husband in the truck manufacturing industry. After settling with creditors, the vested employees' pension benefits were drastically reduced.

[boomerbust]

14. How's Toyota

Doin down there for y'all.

[jody]

15. I believe all car mfg. worldwide are struggling, some much more than others. n/t

[toopers]

33. I think it would break the contracts with the unions and the dealers.

eom

[Hoopla Phil]

2. But I though they said that bankruptcy was not an option. That's why the needed the bailout.

[jody]

5. Bailout funds were for bonuses. Only little people work for a living, paraphrasing Helmsley. n/t

[Kolesar]

6. Citation, please....eom

[jody]

10. See below.

Leona Helmsley, "We don't pay taxes. Only the little people pay taxes ..."

[dysfunctional press]

34. where is the citation that says that auto bailouts were used for bonusses?

i think that's what the poster was interested in.

[DainBramaged]

37. How bout some proof genius?

[no_hypocrisy]

3. "International operations" . . . .

I heard an economist from Baruch College speak this morning. He predicted that the American automobile industry will eventually close up shop here in the States and move its entire operations (esp. the plants) to China.

GM would have incentive to move to China by reorganizing as a new company without indebtedness to the government (bailout money) or to the unions (salaries, healthcare, and pensions).

[Auggie]

7. Jobs -- one more argument for national health care

[JVS]

24. Do they know what happens to poorly performing executives in China?

We could learn a lot from the Chinese in this area

[UpInArms]

8. Let's call it Saturn!

oops!

they already did that

:blush:

[IDemo]

11. Uranus™

[icnorth]

22. I was kinda partial to Vulcan

and then it struck me, Vulcans tried to live by logic and reason...

[mac56]

12. I don't think you need to be Nostradamus to have seen this coming.

:eyes:

[guidoo]

18. Same old same old

This sounds an awful lot like the rumors that were around last time GM was to appear before congress. I believe they are using this as sort of a scare tactic to get what they want out the deal, i.e. more money. If congress thinks that GM is actually going to file bankruptcy, then congress is more likely to shell out more money to stave off mass layoffs...etc.etc...

[PerceptionManagement]

26. How many times can GM say: Give us more bailout $ or we'll go bankrupt?

4 months later: Give us more bailout $ or we'll go bankrupt!! We swear we will.
8 months later: Give us more bailout $ or we'll go bankrupt!! We swear we will.
12 months later: Give us more bailout $ or we'll go bankrupt!! We swear we will.

Just let them die already. At least they can reorganize.

[Duke Newcombe]

27. Screw 'em. Let. Them. Sink.

Investigate their senior officers. Help Ford (the only car company that has been halfway smart during the past 4 years) pick over the bones of GM and absorb it.

No other company would try the "bail us out or we'll do bankruptcy" con game after that.

[Trajan]

38. It needs to be said: Auto Workers can afford goods and services

NON-union working stiffs cannot ....

The problem is NOT auto workers, who can afford to buy their own cars, thanks to long years of union representation .... It is the other NON union workers who get so little pay they cannot afford the proverbial pot to piss in nor the proverbial window to throw it out of ... All of the world's car manufacturers would be making money hand over fist, if workers could only afford to buy something - ALL of them would sell cars ....

If ALL workers got paid as well as UAW workers - We would ALL be the better for it ... Economic activity would take off like a Saturn rocket on steroids ....

LOW pay is the problem .... Low pay for workers = operating losses for companies that depend on sales = degenerate economy, like the one we have right now ...

[Romulox]

41. Are you just awakening from a coma? You might google "TARP"

before going through the trouble of mounting up that fiscal responsibility high horse. :hi:

[Duke Newcombe]

42. Not sure I understand what you mean here. n/t

[Romulox]

43. I mean that it is ridiculous to proclaim that corporations must either

be fiscally sound or fail while our government is preparing to release several trillion more dollars to Wall Street... :hi:

[DainBramaged]

45. Of course, put millions of people out of work why should you give a shit?

You have NO clue what you are talking about, none. But then again, this is DU, where stupid is as stupid does.

[Duke Newcombe]

49. Yes, let's prop up criminally negligent and greedy FAIL corps...'

because temporarily there will be impact to workers, even though longer term it will make for better, more responsible corporations, which actually benefits workers.

We've had quite enough of "three months out" thinking, don't you?

[DainBramaged]

53. You are clueless, and I have nothing further to discuss with you.

THREE FUCKING MILLION JOBS are intertwined with the Big Three. Stick that in your temporary impact and smoke it.


Another DU auto industry expert who doesn't even know where the dipstick is.

[Duke Newcombe]

56. Hrm...too bad. You might have learned something.

Why do you insist on attacking points I never made? Three million jobs dependent on GM? Seriously? And you must have missed where I suggested that Ford (or better yet, a Ford/Chrysler alliance) salvage GM. But whatever...

Yes, you're right. Give them whatever they want when they pull the "we'll die" con game. I'll ask they redirect requests to YOU for further bailout funds. I'm not interested in it unless there is a hell of a lot more oversight or *gasp*, public ownership.

[ChromeFoundry]

47. Are you really attempting to simplify this problem

to a... "Let them fail," mentality? Do you really understand the consequences of having any of the Big-3 fail? Do you even try to fathom the job-loss and effect this would have on the economy?

Wow... I mean really. Get a clue.

[OhioChick]

52. That would be catastrophic....

Not only to the umployed workers, but to the nation as a whole.

I've always purchased American made cars, but have one problem. Why do the "Big 3" outsource all of their IT dept.'s to foreign countries?

I was hopeful when I heard that Ford was burned by the Satyam scandal (Indian IT firm) and had hoped that they would hire Americans to do the work....then letdown when I heard otherwise.

"A Ford spokesman said the company also has a number of existing relationships with other Indian outsourcing companies. It's unclear whether Ford can or will ditch Satyam as a vendor. "We are currently evaluating the situation and are not prepared to make any comments at this time," he said. Still, those additional relationships could prove critical."

http://www.informationweek.com/news/management/outsourcing/showArticle.jhtml?articleID=212701699

I'm all for supporting the big 3 automakers, but when are the big 3 automakers going to support those in my field? (IT)

[LeftHander]

40. Chapter 11 = "Retention Awards" for execs....nt

[pampango]

48. ABC just reported that Obama will release $4 billion to GM right away without waiting for the

viability plan due tomorrow. Their report indicated that the administration was sure that GM would go bankrupt without the immediate release of the funds.

[Duke Newcombe]

50. Mr. President...

...the pain will come sooner or later. You've only postponed the inevitable.

[Romulox]

55. Tell it to CITIBANK, Mr. "Fiscal watchdog".

The lack of all context in your posts points to gross hypocrisy. Of course, you may be unaware of the TARP bills and yet still functional enough to post to a current events website.

But Occam's Razor strongly suggests garden variety hypocrisy.

[Duke Newcombe]

57. I'm sure you're trying to make a point, but damned if it doesn't get lost in your snark

Care to try again, actually making sense and addressing what I actually wrote, as opposed to what you think I believe?

[Romulox]

58. I'm not going to explain the TARP to you. You need to read about it BEFORE styling yourself

as a "fiscal watchdog".

[hope1954]

54. Creedy Execs

They are all connected to Washington

[goforit]

59. If this is the case don't loan anymore $$$$ to them.