Ralph Nader’s statement on GM’s bankruptcy

by ilene - June 1st, 2009 2:29 pm

Source: Ralph Nader, Consumer Advocate, reprinted at Breitbart.com.

H/t to Timothy D. Naegele. Quoting Tim, "Ralph Nader has done enormous positive things for American consumers. The cars that Americans drive today are safer because of Nader’s tireless efforts."

Nader Statement On GM Bankruptcy

Today’s bankruptcy declaration in federal court by General Motors is an avoidable, crude weapon of mass devastation for workers, dealers, auto suppliers, small businesses and their depleted communities. For GM’s voiceless owners — the common shareholders — it is a wipeout. The proximate cause of the bankruptcy was supposed to be the inability of GM and the government’s auto task force to reach an accommodation with GM’s bondholders. But late last week, the bondholder problem was moving toward rapid resolution, and was clearly resolvable. Why then are GM and its multibillion government financier proceeding with bankruptcy?

The bankruptcy and the GM restructuring plan are the product of a secretive, unaccountable, Wall Street-minded government task force that assumed power because of a Congressional abdication of historic magnitude. By all rights, the restructuring plan should have been submitted to Congress for deliberative review and decision…

Many, many jobs will be lost that could be preserved. There is reason to question whether too many plants and brands are being closed — a matter that should have been taken up in Congress. Just the closing of hundreds of (GM and Chrysler) dealerships will cost more than 100,000 jobs. These sacrificed jobs will fray communities and impose enormous expenses on government entities that will have to provide unemployment and social relief, while suffering lost tax revenues.

The unionized workforce will see the wage and benefit structure slashed — even though auto manufacturer wages make up less than 10 percent of the cost of a car — so that new jobs at GM will no longer be a ticket to the middle class. This will drag down the wage structure of the entire auto industry — exactly the wrong direction for the country…

Full article here.

SOURCE Ralph Nader, Consumer Advocate
Copyright 2009 PR Newswire. All Rights Reserved.

Tags: GM Bankruptcy, Ralph Nader

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Administration’s Statement On General Motors Bankruptcy Filing

by Zero Hedge - May 31st, 2009 10:25 pm

Courtesy of Tyler at Zero Hedge

Administration’s Statement On General Motors Bankruptcy Filing

On March 30, 2009, President Obama laid out a framework for General Motors to achieve viability that required the Company to rework its business plan, accelerate its operational restructuring and make far greater reductions in its outstanding liabilities. After two months of significant management engagement, General Motors has developed such a plan and has already begun to make progress toward its achievement. The Company has also secured commitments of meaningful sacrifice from all of its major stakeholder groups, sacrifices sufficient for this plan to proceed forward. As a result, the President has deemed GM’s plan viable and will be making available about $30 billion of additional federal assistance to support GM’s restructuring plan. To effectuate its plan, General Motors will use Section 363 of the bankruptcy code to clear away the remaining impediments to its successful re-launch.

For the better part of a century, The General Motors Corporation has been one of the most recognizable and largest businesses in the world. Today will rank as another historic day for the company—the end of an old General Motors, and the beginning of a new one.

General Motors Restructuring – Shared Sacrifice

The President made clear throughout this process that every one of the Company’s stakeholder would be expected to sacrifice, and that none would receive special treatment because of the involvement of the government. The resulting agreement is tough but fair, and has garnered broad support from GM’s major stakeholders:

Operational restructuring: GM is undertaking a significant operational restructuring that will address past failures, dramatically improve its overall cost structure, and allow the company to move toward profitability even if the auto market recovers slowly. As a result of this restructuring, GM will lower its breakeven point to a 10 million annual car sales environment. Before the restructuring, GM’s breakeven point was in excess of 16 million annual car sales.
The UAW has made important concessions on compensation and retiree health care that, while difficult, will help save jobs for active employees, pensions and health care for retirees, and make GM more competitive. In virtually every respect, the concessions that the UAW agreed to are more aggressive than what the Bush Administration originally demanded in its loan agreement with GM. Among other things, the UAW’s existing VEBA – to which GM

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Tags: GM Bankruptcy, Obama Administration, Zero Hedge

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Told ‘Ya So (GM: ZERO!)

by ilene - May 31st, 2009 9:11 pm

Courtesy of Karl Denninger at The Market Ticker

Told ‘Ya So (GM: ZERO!)

From the WSJ:

Mr. Koch, a managing director at the advisory firm AlixPartners LLP, will be named to the post when GM files its bankruptcy papers at 8 a.m. Monday at the U.S. Bankruptcy Court in New York’s Southern District, these people said. He will be the highest-ranking outsider in GM’s officer ranks and oversee about 60 Alix employees working for the auto maker.

Hope you sold whatever common stock you had into the ramp job the last few weeks.

Now here’s the bad news:

Assuming a New GM emerges from Chapter 11, Mr. Koch will then sit atop a new, separate management team winding down the "Old GM" that remains in bankruptcy court. In this role, he’ll likely report directly to Old GM’s board, which will be different from the New GM board.

As the steward of the Old GM, Mr. Koch will help negotiate contracts between the New GM and Old GM for certain services. He’ll also lead efforts to spin-off or liquidate Old GM’s assets, including the Saturn, Hummer, Saab and Pontiac brands, and as many as 20 factories.

Odds are that if you’re a general creditor (e.g. a supplier) you’re going to get zero for whatever is outstanding on your book in receivables from GM.

Sorry.

This will produce bankruptcies up and down the supply chain.

Count on it.

Oh, and you have to love the report that was on Bloomberg earlier, then disappeared.

Apparently, about 975 of GM’s bondholders agreed to the restructuring they sought, holding just over 50% of the debt.

The other one hundred thousand+ bondholders, including individuals who had their children’s college funds and personal retirement savings in this debt, had no say, did not vote for this action, and in fact oppose it.

They will be wiped out, recovering about ten cents on the dollar.

Under bankruptcy law it is generally true that a "significant" majority of the debtholders must agree to restructuring, not a razor-thin majority. Of course the law doesn’t seem to matter any more in this country when it comes to bankruptcy (or any other kind of law for that matter) so long as the government wants things to go a certain way, and

…

Tags: GM Bankruptcy, suppliers

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Some Facts In The GM Propaganda Race

by Zero Hedge - May 28th, 2009 2:31 pm

Courtesy of Tyler Durden

Some Facts In The GM Propaganda Race

Zero Hedge pointed out how abysmally hilarious CNBC’s repetitive conclusion that GM’s bankruptcy is a done deal, when you only have 20-35% of the bondholders on deck. True, Rattner will likely make some urgent phone calls, and attempt a gut (and wallet) wrenching appeal to the holdouts, referring to such flights of fancy as the holdout’s mother, family, the IRS, the SEC, etc. But even all that does not preclude those who believe they stand a chance of getting a better recovery in liquidation than a 20% warrant upside in a company that has in the past made such utter horrors as the Aztek, in appealing to district and, eventually, Supreme Court.

In fact, ZH is quite confident that Mr. Lauria is currently contemplating just what the best overtures to the Supreme Court should be for both Chrysler and GM. Whatever these are, the fireworks will hopefully be interesting: luckily Sotomayor is still not up and running.

As for the facts, Dealscape has a great interview with Jeff Marwil of Proskauer who lays it out straight:

"It’s not a deal if it’s only 20% of the bondholders agree, and it doesn’t mean the plan will succeed. It just means the government has support now from some bondholders, and bankruptcy now seems like a foregone conclusion," Marwil explained.

"I think the greatest challenge will be doing it right the first time and emerging from bankruptcy poised for success. Who knows how long the bondholders will fight? This will be the biggest bankruptcy ever so there are a lot of issues to get resolved," he said.

In other news, ZH has its Bowling Green spies reporting, and I hope to bring to our readers the moment when Gonzalez puts Peck to shame with the fastest steamrolling of the bankruptcy process in recorded history.

Tags: bondholders, GM Bankruptcy, Gonzalez

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GM To File Bankruptcy On June 1

by Zero Hedge - May 28th, 2009 12:41 pm

Courtesy of Tyler Durden

GM To File Bankruptcy On June 1

According to Bloomberg. As expected, Good GM will buy all the good stuff, and the garbage (Pontiac Aztek and such) will be thrown away.

Market rallies on the news that 20% of bondholders (the ad hocs) agree with the proposed plan to get warrants in a worthless company. Hm, what about the 80% who do not?

Tags: GM Bankruptcy

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