GM sees possibility for early exit from Chapter 11
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GM sees possibility for early exit from Chapter 11
Much talk over the messiness of so-called 'surgical' bankruptcies has spun about the web, and before Chrysler and General Motors went into the process, there was a lot of doubt that they'd be out within the planned 60 days. But Chrysler is already working with Fiat and now GM sees itself possibly setting up the New GM shop by July 15.
There are still several technical hurdles to clear in the mean time, however. And much of the process is out of GM's hands, reports the Wall Street Journal. Much of the remaining work rests on the shoulders of the bankruptcy judge, which will have to clear the remaining issues by July 1 in order to meet a July 15 date for the Section 363 sale.
Once GM is out of bankruptcy - whether that's in mid-July or early August or later - is when the real work will begin. Shedding the least profitable/most costly portions of its business is just the first step toward rebuilding a corporate model that can succeed both in the U.S. and around the world.
There are still several technical hurdles to clear in the mean time, however. And much of the process is out of GM's hands, reports the Wall Street Journal. Much of the remaining work rests on the shoulders of the bankruptcy judge, which will have to clear the remaining issues by July 1 in order to meet a July 15 date for the Section 363 sale.
Once GM is out of bankruptcy - whether that's in mid-July or early August or later - is when the real work will begin. Shedding the least profitable/most costly portions of its business is just the first step toward rebuilding a corporate model that can succeed both in the U.S. and around the world.
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Joined: Mar 2001
Posts: 13,713
From: The Golden State
I want to see GM emerge from Bankruptcy as soon as possible. However, I see alot that can still go wrong.
Although events, bankruptcy courts, state courts, Federal District Courts, and the US Supreme Court rightfully knocked these guys out of the ring every time they tried their stunts, a group of debtholders that held less than 2% of Chrysler's debt proved to be that mosquito that needed to be swatted before Chrysler could emerge from Bankruptcy and get back to business.
With GM, the mosquitos are bigger and could potentially put GM in a position where everything could unravel.
Chrysler essentially sold itself to another company (Fiat), who will take over operations. Despite what some internet lawyers say, when you look at what was done, it's not uncommon. The only difference was that the folks financing the whole thing wasn't the buyer, but the Feds with the support of all members involved.
GM on the other hand is splitting themself in 2, and buying itself (again with federal money).
Where this becomes an issue is that typically when a company buys another, it can set terms in court that shield it from liabilities and claims from the company being bought. However, with GM essentially buying itself, you fall into a far sticker legal swamp when it comes to liabilities, claims, and even challenges from debtholders that could take what was a simple and speedy process with Chrysler into time consuming hearings and undoubtedly far more legal decisions which have the potential of something coming up that could unravel the whole process of emerging from bankruptcy.
What GM has going in it's favor is that unlike Chrysler, it is still producing vehicles while in bankruptcy, generating income. Plus they don't have a concrete deadline to emerge from court (Fiat had the option of walking away on June 15th). This means that GM has the potential of weathering a legal process that could turn out longer than planned.
Although events, bankruptcy courts, state courts, Federal District Courts, and the US Supreme Court rightfully knocked these guys out of the ring every time they tried their stunts, a group of debtholders that held less than 2% of Chrysler's debt proved to be that mosquito that needed to be swatted before Chrysler could emerge from Bankruptcy and get back to business.
With GM, the mosquitos are bigger and could potentially put GM in a position where everything could unravel.
Chrysler essentially sold itself to another company (Fiat), who will take over operations. Despite what some internet lawyers say, when you look at what was done, it's not uncommon. The only difference was that the folks financing the whole thing wasn't the buyer, but the Feds with the support of all members involved.
GM on the other hand is splitting themself in 2, and buying itself (again with federal money).
Where this becomes an issue is that typically when a company buys another, it can set terms in court that shield it from liabilities and claims from the company being bought. However, with GM essentially buying itself, you fall into a far sticker legal swamp when it comes to liabilities, claims, and even challenges from debtholders that could take what was a simple and speedy process with Chrysler into time consuming hearings and undoubtedly far more legal decisions which have the potential of something coming up that could unravel the whole process of emerging from bankruptcy.
What GM has going in it's favor is that unlike Chrysler, it is still producing vehicles while in bankruptcy, generating income. Plus they don't have a concrete deadline to emerge from court (Fiat had the option of walking away on June 15th). This means that GM has the potential of weathering a legal process that could turn out longer than planned.
Registered User
Joined: Mar 2002
Posts: 499
From: Miami, Fl USA
I want to see GM emerge from Bankruptcy as soon as possible. However, I see alot that can still go wrong.
Although events, bankruptcy courts, state courts, Federal District Courts, and the US Supreme Court rightfully knocked these guys out of the ring every time they tried their stunts, a group of debtholders that held less than 2% of Chrysler's debt proved to be that mosquito that needed to be swatted before Chrysler could emerge from Bankruptcy and get back to business.
With GM, the mosquitos are bigger and could potentially put GM in a position where everything could unravel.
Chrysler essentially sold itself to another company (Fiat), who will take over operations. Despite what some internet lawyers say, when you look at what was done, it's not uncommon. The only difference was that the folks financing the whole thing wasn't the buyer, but the Feds with the support of all members involved.
GM on the other hand is splitting themself in 2, and buying itself (again with federal money).
Where this becomes an issue is that typically when a company buys another, it can set terms in court that shield it from liabilities and claims from the company being bought. However, with GM essentially buying itself, you fall into a far sticker legal swamp when it comes to liabilities, claims, and even challenges from debtholders that could take what was a simple and speedy process with Chrysler into time consuming hearings and undoubtedly far more legal decisions which have the potential of something coming up that could unravel the whole process of emerging from bankruptcy.
What GM has going in it's favor is that unlike Chrysler, it is still producing vehicles while in bankruptcy, generating income. Plus they don't have a concrete deadline to emerge from court (Fiat had the option of walking away on June 15th). This means that GM has the potential of weathering a legal process that could turn out longer than planned.
Although events, bankruptcy courts, state courts, Federal District Courts, and the US Supreme Court rightfully knocked these guys out of the ring every time they tried their stunts, a group of debtholders that held less than 2% of Chrysler's debt proved to be that mosquito that needed to be swatted before Chrysler could emerge from Bankruptcy and get back to business.
With GM, the mosquitos are bigger and could potentially put GM in a position where everything could unravel.
Chrysler essentially sold itself to another company (Fiat), who will take over operations. Despite what some internet lawyers say, when you look at what was done, it's not uncommon. The only difference was that the folks financing the whole thing wasn't the buyer, but the Feds with the support of all members involved.
GM on the other hand is splitting themself in 2, and buying itself (again with federal money).
Where this becomes an issue is that typically when a company buys another, it can set terms in court that shield it from liabilities and claims from the company being bought. However, with GM essentially buying itself, you fall into a far sticker legal swamp when it comes to liabilities, claims, and even challenges from debtholders that could take what was a simple and speedy process with Chrysler into time consuming hearings and undoubtedly far more legal decisions which have the potential of something coming up that could unravel the whole process of emerging from bankruptcy.
What GM has going in it's favor is that unlike Chrysler, it is still producing vehicles while in bankruptcy, generating income. Plus they don't have a concrete deadline to emerge from court (Fiat had the option of walking away on June 15th). This means that GM has the potential of weathering a legal process that could turn out longer than planned.
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