http://online.wsj.com/article/SB123535613910745405.html

hopefully they won't need to use it... but clearly the option will be on the table if they're already setting up funding for a bankruptcy loan.

 

$40 billion isn't enough...

 

I wonder if this news is making the UAW a bit nervous?

 

Can someone describe what would happen to GM if it filed bankruptcy vs getting by on loans?

 

I am no expert, but as I understand it, bancruptcy would give them the ability to renegotiate contracts with uaw, suppliers, dealerahips, etc and more leverage on writing off bad debt.

 

They can renogotiate contracts but they are not dissolved despite what many people think. The judge who will oversee the bankrupcy will have a lot of power and influence on the events that take place during Ch 11 proceedings.

If it goes that far though will it be worth it? Will anyone buy them after that?

 

Either way, the only way GM is going to survive is if they convince their bond-holders to take pennies on the dollar. Right now they can't come to an agreement -- everyone is playing chicken.

If no deal can be made, they have little choice but to go into Chapter 11 and let a judge work it out. Although Congress might pass a special law forcing the bondholders to take 30 cents on the dollar as part of the TARP.

At least that's my understanding.

 

Unless the govt is willing to pay off GMs debts in full, there's going to be a LOT of fallout. Not to mention GMs sales will drop to nearly zero. It is NOT a good plan. Also going around the laws to allow restructure without Ch11 might work - but it'd bypass the law and would have consequences as well.

Not a pretty reality.

(And comon, admit the cloud was at least a little funny. )

 

 

I was in the camp that said BK would drive all of their customers away, but I'm starting to believe its now the way to go. GM getting dragged through the mud everytime they need another loan installment is killing their reputation worse than a BK. Taking from the public coffers is rubbing a lot of people the wrong way. If they just BK'ed then they could atleast start rebuilding with a fresh outlook from the public.

 

This is a bad sign. Looks like insides are basically saying GM is done.
The public is always going to be told "things are fine, keep buying cars" until the hour before Ch.11 is declared.

 

That's why they should cut it out with the installments and just give them a huge lump sum. The public's outrage over $14B would have been the same as it would have been over $150B, if we had never heard about a $14B bailout in the first place.

 

The public AND the employees.

 

Yea................ just hand over $100 Billion............... that way, we will know for sure, that there is no way they will EVER be able to repay it.

They would stay afloat, however, until the day before they were due to start paying on it.................. at which point, they would still declare BK................ and us taxpayers would be out ALL of that money.

Yea !!!! Thats the way to do it.

Sorry, but any "solution" is just a different degree of bad. Right now they are on the slow burn road to death. BK today, and they are on the faster road to liquidation, but at less cost (in $$) to the taxpayers. BK 3 years down the road................ moves the pain further down the road, but will probably cost significantly more.

 

As others have alluded to on this forum many moons ago, the inevitable is about to happen. GM were essentially BK a long time ago. If GM had declared bankruptcy sooner they might have been out of danger by now.

If you look at other automakers, like Honda, for example, their restructuring has already begun where they have cut some models. Meanwhile, GM seems to think it can exist with more brands than Honda have models...

And yes, I am still gutted even though I knew this was in the making for a long time...