Bailing out the Detroit automakers

[Gatorubet]

Originally Posted by MaxBuck

I'm not sure why anyone except Chrysler shareholders think bankrupting this junker is a bad thing. The good parts can be sold off by the trustees, the crap can sink into the sea (and the crap includes the union contracts). Retiree benefits, other than perhaps healthcare, is a protected category, is it not?

Does Chrysler's fund have diversification, or are employees forced to put it all in some kind of matching Chrysler stock deal? I don't know if they are 401Ks, or some kind of union retirement plan held by the Autoworkers.

And if they have not been funding it correctly, who ya gonna sue? The bankrupt company?

[MaxBuck]

Originally Posted by Gatorubet

And if they have not been funding it correctly, who ya gonna sue? The bankrupt unon?

You mean you think the UAW might also go bankrupt?

Gee, that would be a shame.

[Gatorubet]

Originally Posted by MaxBuck

You mean you think the UAW might also go bankrupt?

Gee, that would be a shame.

Nope. Just stupid posting sans editing. I meant company.

[jimotis4heisman]

Originally Posted by Gatorubet

Does Chrysler's fund have diversification, or are employees forced to put it all in some kind of matching Chrysler stock deal? I don't know if they are 401Ks, or some kind of union retirement plan held by the Autoworkers.

And if they have not been funding it correctly, who ya gonna sue? The bankrupt company?

they will 363 sale it. which means they will spin good as the "new gm" and bad off and liquidate it/ie its junk gone. rick wagoner was quoted as saying bankruptcy is not an option. he got ripped for it. though the reason was that even if the spun of company was able to stay a float the result would be litigation that would kill the company over all the suits etc brought forth.

pensions are "protected" by erisa act of 1974, though the act fails to govern whether the pension plan will continue to operate after bankruptcy. thus it depends, some are fully protected and theyll get full payouts, some in limited amounts others nothing. in addition you have the pbgc, as gator mentioned they dont cover 401ks only defined benie plans. so long story short, dont count on it...

[jimotis4heisman]

Report: U.S. directs GM to plan for bankruptcy by June 1 - San Francisco Business Times:

the Treasury Department has directed officials at General Motors (NYSE: GM) to lay the groundwork for a "surgical" bankruptcy filing that could last as short as a few weeks for portions of the company. Those portions would be the "good" parts of the company, and the "less desirable" parts of the company would remain in court for much longer and possibly be liquidated,

feds to gm, go bankrupt by june 1.

[jimotis4heisman]

Nardelli Sees New Leaders at Chrysler if Pact Clears - WSJ.com

DETROIT -- Chrysler LLC will likely get a new chief executive and board of directors appointed by Italy's Fiat SpA and the U. S. government, if Chrysler and Fiat follow through on their plans to form an alliance, Chrysler's current CEO told employees in a letter
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"Upon successful completion of the alliance, a board of directors for Chrysler will be appointed by the U.S. government and Fiat," Mr. Nardelli said in the letter, a copy of which was obtained by Dow Jones Newswires.
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fiat and fed will be in charge of chryslers new leadership.

GM Is Pressed to Shed GMC Brand - WSJ.com

General Motors Corp. is coming under pressure from the U.S. government to consider shedding its GMC brand as the company races to transform itself by June 1, people familiar with the discussions said.
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looks like the feds will add gmc to brands they force gm to axe in addition to saab, saturn and hummer.
Marty Padgett's blog: UPDATED: GM Reportedly Considers Nixing Pontiac, GMC; GM Exec Denies It - The Car Connection
maybe pontiac also?
GM: New job cuts coming | Freep.com | Detroit Free Press
gm wants 5b more, will cut jobs, feds arequiring 27b in debt cut, swapping debt for stock with the uaw and a "crafted future vision" that meets obama/rattner/feds standards.

[jimotis4heisman]

The Associated Press: GM spent $2.8M lobbying federal government in 1Q
The Columbus Dispatch - News

DETROIT (AP) -- General Motors Corp. could get as much as $5 billion more in federal loans
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The Treasury also has estimated that it will spend up to $1.25 billion to guarantee warranties for people who buy Chrysler or GM vehicles during the restructuring period.
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http://online.wsj.com/article/SB124027034282936893.html

The Treasury Department kicked off meetings Monday with the heads of Chrysler LLC, Fiat SpA and the United Auto Workers union in Washington as signs increased that Chrysler could be headed for liquidation.
Some officials in the Obama administration have come to conclude that Chrysler isn't worth trying to save because of its weak product line and lack of international reach, said people familiar with the matter.
The meetings Monday with Treasury officials took place in a building near the Capitol, a person familiar with the matter said.
...

feds using pressure, no way. not with the "transparency" of these guys...

[Steve19]

If Chrysler go under, it won't be because the administration did it.

It will be because, after having been bailed out during the Lee Iaccoca era, they failed to develop compelling products, expand internationally, and build profitable market share.

How do any of these Big Three clowns miss developing more fuel efficient and smaller cars? How do they fail to cut their bloated overhead costs? How can they possibly carry the legacy of their union agreement healthcare for life benefits?

Why should the US taxpayer pay for all this foolishness?

The marketing inertia and arrogance that destroyed the Big Three would fill a book on the topic. It will affect their suppliers and hurt Michigan and Ohio very much, while their former directors lament the "bad luck" from their retirement homes in the SunBelt.

[jimotis4heisman]

Originally Posted by Steve19

If Chrysler go under, it won't be because the administration did it.

It will be because, after having been bailed out during the Lee Iaccoca era, they failed to develop compelling products, expand internationally, and build profitable market share.

How do any of these Big Three clowns miss developing more fuel efficient and smaller cars? How do they fail to cut their bloated overhead costs? How can they possibly carry the legacy of their union agreement healthcare for life benefits?

Why should the US taxpayer pay for all this foolishness?

The marketing inertia and arrogance that destroyed the Big Three would fill a book on the topic. It will affect their suppliers and hurt Michigan and Ohio very much, while their former directors lament the "bad luck" from their retirement homes in the SunBelt.

they actually make half way decent domestic cars. gm has a wide line up of hybrids/high mileage cars. a few things you mentioned are killing them. id toss in "two fleet" and "cafe" and youve hit the nail on the head steve-o!

ill ad this via edit..
http://online.wsj.com/article/BT-CO-...21-711738.html

WASHINGTON (Dow Jones)--Bright Automotive, the private startup company that Tuesday unveiled a hybrid car that it says can travel 100 miles on a gallon of gasoline, also said it's in the latter stages of applying for a $450 million government loan.
U.S. Congress has approved loaning $25 billion to help auto companies build or retool their plants to manufacture advanced-technology, fuel-efficient cars.
Bright Chief Executive John Waters said his company is finalizing "very positive" discussions with the Department of Energy, the agency responsible for disbursing the loans.
The company plans to use the funds to build a plant that can manufacture 50,000 of the 100-miles-per-gallon light truck vehicles a year starting in 2013, with production starting up in 2012.
Bright Chairman Reuben Munger said his firm is in talks with a number of companies that have large fleets of small delivery and utility trucks, such as PepsiCo's (PEP) Frito Lay and Duke Energy Corp. (DUK), to migrate their fleets to its vehicle.
Waters said that while his company was also seeking investment in the capital markets, given current market conditions "that may take more time."
Bright is competing with companies such as General Motors Corp. (GM) and Ford Motor Co. (F) for the government loans.

http://www.brightautomotive.com/

[Jake]

The heading to this thread is inaccurate. The automakers could've all sought bankruptcy protection, restructured, and continued as going conerns. They didn't need "bailouts" to remain open.

What would not survive the bankruptcy process are the collective bargaining agreements. That is what we're bailing out - UAW contracts the automakers can no longer afford to pay. Big Labor didn't give Obama and his fellow Democrats all of those millions for nothing.

Could the automakers have filed for bankruptcy anyway, and refused the bailout? Sure, and they would've paid for it with new laws, new taxes, and anything else the feds could do to make their lives hell. The automakers were not given a choice. That's politics.

[jimotis4heisman]

http://www.marketwatch.com/news/story/gm-miss-1-bln-debt/story.aspx?guid={16D576C7-F4B0-4A9E-A48E-774FEB963440}&dist=msr_1

SAN FRANCISCO (MarketWatch) -- General Motors Corp., fighting for its survival outside of bankruptcy courts ahead of a looming deadline, plans to skip a $1 billion debt payment due June 1, according to a Wall Street Journal report on Wednesday.

GM's (GM:General Motors Corp
News , chart , profile , more
Last: 1.73+0.03+1.78%
2:25pm 04/22/2009GM 1.73, +0.03, +1.8%) finance chief Ray Young told reporters at a Chinese auto industry summit in Detroit that the beleaguered automaker is relying on a debt-for-equity exchange or court protection to lower its $28 billion in debt.

He said bankruptcy is "probable," though GM, with the full backing of the U.S. government, will right the ship "in court or out of court," the Journal reported.
GM spokeswoman Renee Rashid-Merem said the company is working aggressively to reach a deal with bondholders, which she said is an "essential element" of the restructuring efforts.
She explained that there are two possible scenarios in which GM wouldn't make the payment. One would be if the bond exchange was not yet completed by June 1, and the other would be if the company falls into bankruptcy before the deadline.
The development is the latest in a series of signals pointing toward a potential bankrupcty. Last week, GM CEO Fritz Henderson said that while it's not the preferred option, bankruptcy remains the likely outcome of the company's drawn-out saga considering the demands of the Obama administration. See full story.
Earlier Wednesday, Goldman Sachs said that GM and Chrysler will probably file for bankruptcy in the coming weeks, paving the way for rival Ford Motor Co. (F:Ford Motor Coto capitalize on the market-share front. See full story.
"While there is significant operating upside at GM ..., we see a high likelihood that the current class of common shares will be terminated through bankruptcy, [or significantly diluted in a best case]," Goldman analyst Patrick Archambault told clients in a note.
As far as union discussions, CFO Young said negotiations on restructuring $20 billion in health-care obligations have eased as the UAW focuses on a deal with Chrysler LLC, which faces its own deadline at the end of the month to partner with Italy's Fiat.
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jake you may get your wish, to some extent. theyll end up with a judge who will allow a 363 sale.

[jimotis4heisman]

AP Sources:GM to shut many US plants up to 9 weeks

no need to even post the article, link says it all...

[lvbuckeye]

can they do that?

Feds prepare to file Chrysler bankruptcy papers - Washington Times

edit: OH, I GET IT. the automaker bailout was really a UAW bailout. thanks, guys.

[jimotis4heisman]

The Columbus Dispatch : GM to cut 21,000 jobs, scrap Pontiac
pontiact and 21k jobs gone.

[jimotis4heisman]

GM Offers U.S. a Majority Stake - WSJ.com

General Motors Corp. outlined a new turnaround plan that would leave the U.S. government controlling the auto maker, as it set up a showdown with bondholders that could determine whether the company lands in bankruptcy court.
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At the same time, GM said it would use stock instead of cash to pay off half the $20.4 billion it owes a United Auto Workers fund to cover retiree health care. That stock would leave the union owning about 39% of GM.
The upshot would be the transformation of a troubled American icon, leaving it in the hands of the government and its main union.
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The new plan was conceived in cooperation with an Obama administration team that rejected a Feb. 17 GM revamping plan, saying it didn't go far enough.
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50.1% to the fed govt, 39% union ownership.

UAW Would Own 55% of Chrysler Stock Under Deal - WSJ.com

The United Auto Workers union would eventually own 55% of the stock in a restructured Chrysler LLC under the deal reached by the union and the auto maker, according to a summary of the agreement that was reviewed by the Wall Street Journal.
Fiat SpA will "eventually" own 35% of Chrysler, and that the U.S. government and Chrysler's secured lenders together will end up owning 10% of the company, once it is reorganized, that summary said.
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