Remember Chapter 11 bankruptcy is NOT the same as...
being out of business. They would continue to operate.
The real question is who would buy a GM car and have a questionable warranty? There may be merit in letting GM enter Chapter 11 and then help them with a lot conditions as well guarantees to customers. The upper management has to be blown away and the GM stockholders should be left holding the proverbial empty bag. Some divisions can then be sold off to other car companies, e.g. Toyota, that know how to run the business. Alex
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The Bloomberg story says Chapter 11 is not an option.
It's a great piece - lots of details:
http://www.bloomberg...8&refer=worldwide === begin cut === [...] Default Risk Credit-default swaps protecting against a GM default for one year rose yesterday to a level that implies the market has priced in a more than 71 percent chance of default, according to CMA Datavision. One-year credit-default swaps were quoted at a mid-price of 55.5 percentage points upfront, compared with 51 percentage points on Nov. 7, CMA data show. That means it would cost $5.55 million initially in addition to $500,000 over one year to protect $10 million of GM bonds. Bill Ackman, manager of the Pershing Square Capital Management LP hedge fund in New York, said GM shouldn't take government money because ``it has been hamstrung for years because it has too much debt and it has contracts that are uneconomic.'' Ackman, who said he doesn't have a position in GM securities, said yesterday on the Charlie Rose show the automaker should file for a so-called prepackaged bankruptcy with financing to keep operating while in court protection. That may be difficult. Such debtor-in-possession loans have ``all but shut down,'' CreditSights Inc. said yesterday in a report. The loans, which are paid off when companies exit bankruptcy, aren't being made as lenders become more averse to risk, wrote Chris Taggert, a New York-based analyst. GM would have no choice but to shut down, said Maryann Keller, an independent auto analyst and consultant based in Greenwich, Connecticut. A GM failure that stops production would cost 2.5 million jobs in the U.S. in the first year, according to the Ann Arbor, Michigan-based Center for Automotive Research. ``In this world, you don't go Chapter 11 reorganization,'' Keller said in an interview. ``You go Chapter 7 liquidation.'' To contact the reporter on this story: Mike Ramsey in Southfield, Michigan, at mramsey6@bloomberg.net Last Updated: November 11, 2008 16:27 EST === end cut === Maryann's been monitoring the Big 3 for decades and has been a critic of them almost as long. (She was often a guest on Louis Rukeyser's "Wall Street Week".) Cheers, Scott. |
GM situation gets progressively worse
- (jay)
- (20)
- Nov. 11, 2008, 04:24:50 PM EST
Of course Obama urges Bush to do this . . .
- (Andrew Grygus)
- (2)
- Nov. 11, 2008, 05:25:51 PM EST
Should be popular, that scheme -
- (Ashton)
- (1)
- Nov. 11, 2008, 06:26:22 PM EST
may all those UAW pensioners camp in yer living room
-NT
- (boxley)
- Nov. 11, 2008, 07:30:07 PM EST
Re: GM situation gets progressively worse
- (beepster)
- (15)
- Nov. 11, 2008, 06:09:10 PM EST
Agreed
- (malraux)
- Nov. 11, 2008, 06:27:05 PM EST
Yes, but they're too big to fail.
- (Another Scott)
- (13)
- Nov. 11, 2008, 06:58:04 PM EST
Remember Chapter 11 bankruptcy is NOT the same as...
- (a6l6e6x)
- (1)
- Nov. 11, 2008, 09:32:26 PM EST
The Bloomberg story says Chapter 11 is not an option.
- (Another Scott)
- Nov. 11, 2008, 09:45:59 PM EST
Which is a good argument for breaking it up
- (jay)
- (10)
- Nov. 12, 2008, 10:06:54 AM EST
What part of General Motors...
- (folkert)
- (9)
- Nov. 12, 2008, 11:41:22 AM EST
Hush now
- (beepster)
- (3)
- Nov. 12, 2008, 01:24:36 PM EST
No, they're bad for business
- (jake123)
- (2)
- Nov. 12, 2008, 01:39:13 PM EST
If GM goes under
- (beepster)
- (1)
- Nov. 12, 2008, 01:53:27 PM EST
GM isn't going under because of their unions
- (jake123)
- Nov. 12, 2008, 02:07:44 PM EST
Unions are only part of the problem
- (jay)
- (3)
- Nov. 12, 2008, 01:44:45 PM EST
employer supplied healthcare, what were they thinking
-NT
- (boxley)
- (1)
- Nov. 12, 2008, 01:48:02 PM EST
It isn't employer health care per se
- (jay)
- Nov. 12, 2008, 02:10:00 PM EST
Yes, but those executives didn't plan . . .
- (Andrew Grygus)
- Nov. 12, 2008, 03:41:08 PM EST
+5, Informative
-NT
- (static)
- Nov. 12, 2008, 06:09:01 PM EST
The White House has denied the Colombia stipulation.
- (a6l6e6x)
- Nov. 11, 2008, 09:16:24 PM EST
