Gotta love this, GM to get another 16bil.

[danieloneil01]

http://news.yahoo.com/s/ap/20090217/ap_on_bi_ge/gm_bailout


DETROIT – General Motors Corp., presenting a dire outlook for the future, said Tuesday it may need $30 billion in total government financing to weather the economic downturn and would cut 47,000 jobs worldwide and shutter five more U.S. factories in a massive restructuring plan.

The automaker is already surviving on $13.4 billion in federal loans and said in a plan submitted to the Treasury Department that it would seek an additional $16.6 billion if economic conditions worsen, but it could achieve profitability in two years and fully repay its loans by 2017.

[speculawyer]

Why do you assume they will get it? There is a good chance, but it is not a sure thing. I think they need a pre-planned bankruptcy.

[SEGsby]

Old GM factories might just be the perfect places for Aptera production sites... :aptera:

[danieloneil01]

The UAW announced Tuesday that it reached the tentative agreement with General Motors Corp., Chrysler LLC and Ford Motor Co. over contract concessions, as GM and Chrysler sent plans to the Treasury Department asking for a total of $39 billion in government financing to help them survive.

Concessions with the union are a condition of the $17.4 billion in government loans that the automakers have received so far.



here we go.

[speculawyer]

here we go.

It ain't over . . . bankruptcy is still an option being considered and recommended by some (http://finance.yahoo.com/news/Bankruptcy-may-be-good-option-rb-14401001.html).

A big hole with the plan GM submitted was unspecified additional cuts to the bondholders but no agreement was made with them, so the plan wasn't complete.

I'm in the camp that thinks some sort of pre-package bankruptcy is the best option. Spread the pain around (shareholders, bondholders, unions, execs, etc.) until a real workable company is created and then have the government give the entity coming out of bankruptcy a big low interest loan with 1st in line rights if any subsequent bankruptcy occurs. And the plan should include a payment plan for the new entity to pay the government back. Anything else than that seems like just throwing away tax dollars.

[KarenRei]

I agree, under the constraint that it's not called bankruptcy. Call it anything else, and make it look like the government is 100% behind them. That way consumers won't be afraid to purchase from them.

[RainCaster]

Call it what it is, and begin by laying off the top 3 layers of management. Take away their golden parachutes and make them all get new jobs like the peons beneath them. Change has to begin at the top...

Bankruptcy isn't as bad as it sounds. People will buy GM cars when they produce cars people want.

[KarenRei]

Perhaps.

I'm glad to see that Lutz is already on the way out. But I won't be happy until Wagoner is gone, too.

[aptera1213]

a car is only second, for most people, to their home as the biggest purchases they make...

no way will people buy from companies in bankruptcy...they can just buy from Toyota or Honda or Nissan or Mazda or Subaru or Hyundai or Kia or Ford or BMW or VW or etc etc etc...there are tons of car companies out there...why buy from one who may not be there in a year or two to supply service and warranty repairs...

much easier to go with any of the other brands than a brand in bankruptcy...

if you say, "mmm, GM is hitting some rough times, but they are getting the loans and backing to help them through it." you might buy a car from them

if you say, "mmmm, GM just filed bankruptcy. dang, that's bad, i wonder if they will even be around next year." well you will not be buying a car from them no matter what the car is.

[speculawyer]

no way will people buy from companies in bankruptcy....
Well, that is why the pre-packaged bankruptcy is the way to do it. Basically, you are in and out of bankruptcy instantly . . . you don't let the b-word linger.

Just one day you file on a Friday, the shareholders are wiped out, the bondholders take a cut and get equity, the unions take a cut, execs get booted or take a cut, other creditors take a cut & get some equity, the govt. gives some loan interest loans (and maybe gets some shares), and on Monday you are a new company . . . not a company actually in bankruptcy.

That's the theory anyway.

[danieloneil01]

Call it what it is, and begin by laying off the top 3 layers of management. Take away their golden parachutes and make them all get new jobs like the peons beneath them. Change has to begin at the top...

Bankruptcy isn't as bad as it sounds. People will buy GM cars when they produce cars people want.


And judging by the 2010 Camaro, they won't. :jumping0007:

[speculawyer]

And judging by the 2010 Camaro, they won't. :jumping0007:
Meh. Certainly not the way I roll either, but you'd be surprised. There is still demand for the Camaro. (However, I think the people that buy it will be regretting it a few years down the road when gas prices go up as they will inevitably.)

[speculawyer]

GM division Saab files for protection from creditors.
(http://biz.yahoo.com/ap/090220/eu_sweden_saab.html)

[DonC]

Just one day you file on a Friday, the shareholders are wiped out, the bondholders take a cut and get equity, the unions take a cut, execs get booted or take a cut, other creditors take a cut & get some equity, the govt. gives some loan interest loans (and maybe gets some shares), and on Monday you are a new company . . . not a company actually in bankruptcy.

That's the theory anyway.
Since you're apparently familiar with the legal process you know that legal time is akin to geologic time and that you have to interpret "instant" in this context.

We've never had a car company go into bankruptcy and survive, and a GM bankruptcy might be the largest and most complicated ever.

It may be an option but whether it's a viable alternative is an open question. Certainly we can expect Ron Bloom to use it as leverage.

[speculawyer]

Since you're apparently familiar with the legal process you know that legal time is akin to geologic time and that you have to interpret "instant" in this context.

We've never had a car company go into bankruptcy and survive, and a GM bankruptcy might be the largest and most complicated ever.

It may be an option but whether it's a viable alternative is an open question. Certainly we can expect Ron Bloom to use it as leverage.
Well, I know very little about bankruptcy law.


I did have a corporate finance professor that had this statement about bankruptcy . . . "Various sides will always threaten bankruptcy . . . but it is like grabbing a grenade and saying 'Do what I want or I'll let this thing go'".