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Old 02-24-2009, 04:05 AM   #1
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Bankruptcy !!

It remains to be seen which scenario will play out, but it sounds as if two of the three big U.S. automakers could be filing for bankruptcy protection within the next few weeks.

http://www.leftlanenews.com

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Old 02-24-2009, 05:00 AM   #2
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General Motors may be strongly opposed to a Chapter 11 bankruptcy filing, but the U.S. Treasury Department could be planning to force their hand in the matter. Per a new report, the Treasury Department is readying a $40 billion financing package, should either of the Detroit automakers file for bankruptcy protection.

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Old 02-24-2009, 09:23 AM   #3
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The only reason it has not already happened is that Congress has been preventing it from happening. Congress and the Obama administration were supported by the UAW and helped get them elected. The word is that the Obama administration would like to see it happen but cannot appear to eager to sell out the union. Obama knows that a major restructure beyond the current plan is needed. There are a lot of backroom politics going on right now and the decision to declare chapter 11 no longer rests with the GM board.

Congress and the Administration do not want to see the large job losses that will occur but may be inevitable.

What you will see shortly is indeed a version of Chapter 11 with the Government forcing one of the large Banks to provide the debtor financing with US backed guarantees. The tax payer will still be on the hook but they will have put lipstick on the pig.


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Old 02-24-2009, 11:23 AM   #4
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It is the worse in Belgium
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Old 02-24-2009, 11:28 AM   #5
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The only reason it has not already happened is that Congress has been preventing it from happening. Congress and the Obama administration were supported by the UAW and helped get them elected. The word is that the Obama administration would like to see it happen but cannot appear to eager to sell out the union. Obama knows that a major restructure beyond the current plan is needed. There are a lot of backroom politics going on right now and the decision to declare chapter 11 no longer rests with the GM board.

Congress and the Administration do not want to see the large job losses that will occur but may be inevitable.

What you will see shortly is indeed a version of Chapter 11 with the Government forcing one of the large Banks to provide the debtor financing with US backed guarantees. The tax payer will still be on the hook but they will have put lipstick on the pig.


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This is 100% accurate.
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Old 02-24-2009, 11:34 AM   #6
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Oh noes, taking the middle-ground in the political spectrum is suddenly a backroom shady deal.. Yeesh. Is there anyone left there that has the balls to pull the trigger already?

And by that say: Fkk it, you, bank.. front the loan. You, useless ancillary 19 year old UAW guy, take the cut and go find a job at that Toyota plant. Wait, they have the same fringes as GM? Well that's the point now, so go to college if you want a real job. There GM/Chrysler. Go make some money, you're welcome..~

I know the above was harsh, and I do not mean to offend those that work in the auto industry, but someone has to take the ole yeller system out back and shoot it. This is just getting too re-GD-diculous to even be sane anymore.
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Old 02-24-2009, 12:36 PM   #7
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This is why I went ahead and ordered my car. Anything is possible. I think if they do even more restructuring and it gets really radical, Camaro may still be safe but to be safe I just wanted to be assured of getting one. Where there is a dollar to be made, there will be someone there to make it. Parts may become expensive but so be it.

No easy answers. Someones gonna get the short end of the stick. I'm in favor of whichever decision would minimize the pain for the masses. What that is is debateable. I seem to be of the minority opinion so.........
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Old 02-24-2009, 01:04 PM   #8
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This is why I went ahead and ordered my car. Anything is possible. I think if they do even more restructuring and it gets really radical, Camaro may still be safe but to be safe I just wanted to be assured of getting one. Where there is a dollar to be made, there will be someone there to make it. Parts may become expensive but so be it.

No easy answers. Someones gonna get the short end of the stick. I'm in favor of whichever decision would minimize the pain for the masses. What that is is debateable. I seem to be of the minority opinion so.........
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Old 02-24-2009, 01:21 PM   #9
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The ones being shafted right now are those who saved their money and spent responsibly. As a fan of General Motors, I'm happy they are being saved; as a taxpayer, I'm pissed at the whole country.
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Old 02-24-2009, 01:44 PM   #10
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The ones being shafted right now are those who saved their money and spent responsibly. As a fan of General Motors, I'm happy they are being saved; as a taxpayer, I'm pissed at the whole country.
You got that right!
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Old 02-24-2009, 02:11 PM   #11
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The ones being shafted right now are those who saved their money and spent responsibly. As a fan of General Motors, I'm happy they are being saved; as a taxpayer, I'm pissed at the whole country.
Why? Because they are not buying GM? Want to put a gun to their head and force them to buy GM?
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Old 02-24-2009, 02:14 PM   #12
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Ahh the interwebs... the only place in the world where people miss each others points so hard you hear an audible bang from the post hitting the forum instead of its target.


It almost seems like you have to try to miss a point by that far.
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Old 02-26-2009, 07:38 AM   #13
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GM posts a net 9bil loss in Q4 and burns through their "worst case scenario" loans in less than 3 months. It's time to end this. They have not posted a profit in 4 years.
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Old 02-26-2009, 08:06 AM   #14
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GM posts a net 9bil loss in Q4 and burns through their "worst case scenario" loans in less than 3 months. It's time to end this. They have not posted a profit in 4 years.
http://jalopnik.com/tag/gm-bankruptcy/?id=5160704

hellooooo mr. bankruptcy!
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Old 02-26-2009, 08:10 AM   #15
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Yep....its time take the medicine.
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Old 02-26-2009, 09:15 AM   #16
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I'll let you out without resistance.
Parting this way is not
The way we ever thought.
In fact I always thought we'd go the distance.
But we went nowhere quick,
So sad it makes me sick.
Just one more thing o.k.
It's all so sad to say...
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Old 02-27-2009, 09:33 AM   #17
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GM posts a net 9bil loss in Q4 and burns through their "worst case scenario" loans in less than 3 months. It's time to end this. They have not posted a profit in 4 years.
They would have if the economy hadn't tanked. They were well on their way.

I'm curious to know why you're so quick to write them off? Is it simply because you think Chapter 11 is the magic cure?
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Old 02-27-2009, 09:55 AM   #18
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They would have if the economy hadn't tanked. They were well on their way.

I'm curious to know why you're so quick to write them off? Is it simply because you think Chapter 11 is the magic cure?
I don't think any of us that are suggesting bankruptcy as an option wants to right GM off. What we want to see is a healthy and sustainable auto industry and would love to see GM as part of that industry. And honestly I don't care how they do it, but they should not be borrowing money from our government. Doesn't everyone realize that our goverment does not have the money to lend. China holds hundreds of billions of dollars in treasury notes. So I guess you can say GM is really a global company, because every dollar they get from the US goverment will need to be borrowed from some other country, or printed...thus causing inflation.

At some point we all have face reality. The key is sustainability. While you say they were well on their way to profitability, the problem is that it was all based on a bubble. Too many people consuming at unsustainable levels. What does it say about our economy when it can be so drastically affected by a lack of credit? Perhaps it says we are consuming more than we can afford and by definition it is therefore unsustainable. Make no mistake, I am guilty of the same behavior.

You know GM says one of the reasons they don't want to file bankruptcy is because of public opinion and they believe that people won't buy cars from a company that is going through bankruptcy. While that may be the case, I wonder how public opinion of a company seeking billions of dollars in loans that may NEVER be paid back now, will affect their decision to consider something other than a GM vehicle.
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Old 02-27-2009, 10:02 AM   #19
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I don't think any of us that are suggesting bankruptcy as an option wants to right GM off. What we want to see is a healthy and sustainable auto industry and would love to see GM as part of that industry. And honestly I don't care how they do it, but they should not be borrowing money from our government. Doesn't everyone realize that our goverment does not have the money to lend.
And here we have the #1 reason why Bankruptcy won't work (forget consumer perception):

If GM files for Chapter 11...they must get DIP financing to insure their existance, otherwise it's straight to Chapter 7 and the collapse of the Industry. That money will come, in some fasion, from the government!!!! Couple that to the sheer volume of money we're talking here...in the neighborhood of one HUNDRED billion....and those won't be loans.

Chapter 11 is not a free-ride. No company as large as GM has ever filed for bankruptcy. No company with as negative a balance-sheet......

EDIT: Why do you say they'll never pay back their loans? That's false.
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Old 02-27-2009, 10:16 AM   #20
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DIP financing is a loan. In fact, if GM did end up in Ch 7, whoever offered DIP financing (in this case it would be the fed) is first in line to get their piece of the asset pie.
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Old 02-27-2009, 10:28 AM   #21
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Sorry...I botched that one up...but the point remains, I think. We're talking huge money...
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Old 02-27-2009, 10:34 AM   #22
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Yup. The amount of federal money it would take to get GM through Ch. 11 would be MUCH greater than the amount it would take without it. Either way, Obama seemed committed to keeping GM afloat in his speech (even though the US didn't invent the automobile as he said) so I'm really not too worried about GM going Ch 7.
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Old 02-27-2009, 10:48 AM   #23
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Yup. The amount of federal money it would take to get GM through Ch. 11 would be MUCH greater than the amount it would take without it. Either way, Obama seemed committed to keeping GM afloat in his speech (even though the US didn't invent the automobile as he said) so I'm really not too worried about GM going Ch 7.

Not sure how you figure that. Chapter 11 does not mean that the government pays off a business' debt. It means the government decides who gets how much and what after negotiations have taken place between all parties affected.

Right now, GM spends more money then it makes. It cannot even afford current finance payments. It cannot continue down this road - something has got to give because sooner rather than later, it's going to have no money in the bank. When that happens and a supplier/bond holder does not get paid, they can force GM into bankruptcy by petitioning the courts. In other words, Chapter 11 may be something GM may not be able to avoid.
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Old 02-27-2009, 10:58 AM   #24
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Not sure how you figure that. Chapter 11 does not mean that the government pays off a business' debt. It means the government decides who gets how much and what after negotiations have taken place between all parties affected.

Right now, GM spends more money then it makes. It cannot even afford current finance payments. It cannot continue down this road - something has got to give because sooner rather than later, it's going to have no money in the bank. When that happens and a supplier/bond holder does not get paid, they can force GM into bankruptcy by petitioning the courts. In other words, Chapter 11 may be something GM may not be able to avoid.
GM would require DIP financing to make it through Ch. 11. They forecast a need for around $100bil will be needed to emerge from Ch. 11. Part of this is because their sales forecasts show (and I wholeheartedly agree) that sales will tank even more if they were to enter bankruptcy. The average consumer has a stigma when it comes to "bankruptcy" that GM will not be able to avoid. Why would they buy a car if they believe their warranty will be meaningless? In order to combat this, GM and/or the fed will have to take some sort of measure to guarantee the warranty of vehicles purchased while GM is under Ch 11. This alone is an expensive proposition.
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Old 02-27-2009, 11:02 AM   #25
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GM would require DIP financing to make it through Ch. 11. They forecast a need for around $100bil will be needed to emerge from Ch. 11. Part of this is because their sales forecasts show (and I wholeheartedly agree) that sales will tank even more if they were to enter bankruptcy. The average consumer has a stigma when it comes to "bankruptcy" that GM will not be able to avoid. Why would they buy a car if they believe their warranty will be meaningless? In order to combat this, GM and/or the fed will have to take some sort of measure to guarantee the warranty of vehicles purchased while GM is under Ch 11. This alone is an expensive proposition.
That ship has already sailed. People who are worried about warranties are already staying away from GM cars because of the companies financial state. With proper marketing, GM could instill confidence to the general public during a CH11 re-org.
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