GM considering Chapter 11 filing, new company: report

[babylonsister]

GM considering Chapter 11 filing, new company: report
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.

General Motors and Chrysler LLC face a Tuesday deadline to file restructuring plans to the government in exchange for receiving $17.4 billion in federal loans.

more...

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

[jkshaw]

1. Sister, is this good or bad for the economy?

[babylonsister]

2. I don't know, but maybe this is what should have happened

before they were bailed out. That's what airlines have had to do... I guess we'll see, but this timing is odd, I think.

[cliffordu]

3. Yep - odd timing.

Malfeasance??

[Horse with no Name]

8. The way I understand it

they did not have enough liquidity to go bankrupt because your assets to debt have to be a certain ratio and they didn't have it.
So, they took the bailout money, reinvested in their overseas operations, now they are going to go Chapter 11 here.
With Chapter 11, they can ditch the pensions. That is where our bailout money went. To make them liquid enough for bankruptcy and to destroy the last vestiges of the promise of healthcare and pensions to their retirees. This is a bad thing. And we funded it. But hey! At least their overseas operations profited!
We have to stop handing out money without strings attached. We simply have to.:(

[blue_onyx]

10. There were strings attached....

Hence the required "viability plan." This is basically what was planned. Bankruptcy was talked about even before the bailout money was given out. I think it was usually referred to as a "structured bankruptcy." A possible bankruptcy isn't surprising to me and it certainly isn't surprising to anyone in the government. I think everyone knew it was still a possibility, even with the government money. I hope bankruptcy isn't necessary but I'm not particularly optimistic. I doubt Chrysler will make it past 2009. GM will make it but will be a smaller company after losing several brands (probably Saab, Hummer, and Saturn). This will be a interesting and scary week.

[samplegirl]

4. This is very bad news :(

[navarth]

5. does this clear the way for them to dump unions? n/t

[kestrel91316]

6. Probably. I think that's been their primary goal all along......

[navarth]

7. certainly smells that way. n/t

[Maru Kitteh]

9. Well then, it's just a matter of time before my little town goes under.

We have a valve factory here that makes valves for GM. That's all they do. They represent the very last of the living wage jobs for people without 4-year degrees, and many with.

My sister will lose everything she's worked over 30 years for. She'll lose her land and the house they built with their own hands. Jeezus this sucks.