Bondholder Rejection Paves the Way for GM Bankruptcy

Wednesday, May 27th, 2009

A dispute between GM bondholders and the U.S. government all but doomed the falling fortunes of embattled car giant General Motors as the two parties failed to come up with an amicable settlement for the proper stakes of the company.

The government had asked GM to submit a plan that 90 percent of its bondholders would agree upon which unfortunately was way off the expected agreement. With that said, GM is expected to head to bankruptcy in the following days, a move that many are expecting.

This new development only further upholds that the stimulus plan that was handed over to the Big Three some months ago went for nothing at all. Already highly controversial, the move was already highly criticized and with this impending Chapter 11 filing of GM, they and Chrysler have all but wasted the said aid, leaving Ford all by its lonesome although they too are surely to be having problems financially.

A person familiar with discussions between GM and the government told The Associated Press any bankruptcy filing would probably come around the government’s Monday deadline for GM to finish restructuring or enter court protection. The person asked not to be identified because the talks are private.

To avoid bankruptcy, the government had said GM must shed debt, cut labor costs and close plants.

(Source) Yahoo

Tags: amicable settlement, bankruptcy filing, bondholders, car giant, Chapter 11, Chrysler, falling fortunes, Ford, General Motors, GM, plants, rejection, restructuring, stimulus plan

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GM Told to File for Bankruptcy by June 1

Sunday, April 12th, 2009

Though General Motors denies it and continues to claim that it can restructure itself to weather the financial crisis, the U.S. government thinks otherwise. In fact, the US Treasury Department has told General Motors to make all necessary preparations for a possible bankruptcy filing by June 1.

Citing unnamed people “with knowledge of the plans,” the instructions had been conveyed by members of President Barack Obama?s automotive task force, who spent last week in meetings and on conference calls with GM in Detroit and Washington.

The automaker already has been granted 13.4 billion dollars in federal aid, and its managers are insisting the company’s image should not be damaged. The preparations are aimed at assuring a GM bankruptcy filing is ready should the company be unable to reach agreement with bondholders to exchange roughly 28 billion dollars in debt into equity in GM and with the United Automobile Workers union, which has balked at granting concessions without sacrifices from bondholders.

(Source) AFP

Tags: automobile workers, bankruptcy filing, Barack Obama, billion dollars, bondholders, concessions, financial crisis, General Motors, GM, necessary preparations, us treasury department, workers union

Posted in Business, GM | 0 Comments