Simple question: What would happen if Delphi strikes and sends GM into Chapter 11?

Things I think can happen:

1. Immediate renegotiation of UAW contract.
2. Immediate renegotiation of plant contracts.
3. Immediate renegotiation of Delphi and other supplier contracts.
4. Ford declaring chapter 11 also, maybe Chrysler.
5. Court letting some assets be sold off (remainder of GMAC, Hughes).
6. Freeze in product development.

Things I don't think will happen but possibly could:

1. Renegotiation of dealership contracts (hoping for this one).
2. Voiding of warrenties.

Also how would the stock react? How would GM be better able (or less able) to fight Toyota and other competitors? How would the media (auto and non-auto alike) react to this? What would happen to the retired employees and families of former employees? Would GM's job bank close? How would this affect Holden, GM Europe and other overseas divisions?



Looking for whatever answers I can get.

The poll portion of this thread is:
How would the public react?

***This thread is also going up on GMI and C&G no need to reply to multiple threads if you don't want to, I just want a wider response.

 

It seems to me that if GM goes into chapter 11...its going to pull quite a few other businesses outside of GM down with it. But a lot of good may come a few years down the road since they will be able to renegotiate a lot of things.
However, I hope they can solve their problems without bankrupcy. New models indicate they are moving forward. Get Pontiac and Buick back into the game and keep going forward.

I personally think killing the 3800 series engine was a huge hurt to buick. Anyone who buys Buick knows that engine, and Buick and 3800 go hand in hand.

 

I don't think there will be much left of GM as we know it after Chapter 11. Especially after last year's changes to the bankruptcy law, companies will have a much harder time using Ch 11 just to weasel out of contracts (Big thank you to the airlines for this). The company's most valuable assets would be sold at auction to satisfy GM's massive debt obligation. Even if some of the debt obligations were restructured, GM only has about 100B of plant assets and close to 300B in outstanding debt. Enough would demand immediate cash repayment to force GM to sell off parts necessary for operation. And of course debtors have priority, so the shareholders get completely screwed.

 

shrot term, they are F'ed.
Long term if Toyota and America dosnt abandon the american car company it should be okay.
if GM files for Bankruptcy GM has to put a PR Campaign on this like no other to state that what is needed and what is not and letting people know that this is the end of the old way of GM and the new global way gm is restructuring. Only way people will perceive its a good thing.

 

I read somewhere that showed 74% of people polled would NOT buy a car from a company that declared bankruptcy.

 

I don't know. That's what people may say in a poll, but when it comes down to it we won't know until things actually happen...

Hell, I still fly Delta even though they're in Chapter 11. And there's a much bigger risk if a Plane has a malfunction then a vehicle...

 

Right. People didn't stop flying United, NWA, Delta, US Air, ATA, America West, or Continental. What it did do is allow them all to significantly restructure in ways they would not have been able to do outside of bankruptcy. Some will survive, my bet is 2 on that list above will not.

Edit: US Scare is already gone, so thats one! Also, a moment of silence for HOOTERS Air, which passed this week. A sad day indeed :-(

 

Seems like plenty of people are buying Chryslers

 

Chrysler never requested bankruptcy protection.

 

Ummmmmm yeah, youre right......confused Chrysler getting money from the Government to keep from going bankrupt and Chrysler going bankrupt...my bad

 

Air fair is a commodity, I couldn't care less who I fly, as long as it is the cheapest flight with the shortest lay over that flies at the time I want. I'm not going to pay an extra $100 just to fly on XYZ. But if the company is bankrupt I'm not going to book with them out of fear they might cancel the flight.

Look at computers. People are more likely to buy a Dell or HP than a small company that might go out of business and void the warranty (Packard Bell, Quantum, etc..)

When you are spending $20K+ you want to go with a trustworthy company no matter what the product is.

 

Agreed. And I think people will still buy GM vehicles post-bankruptcy, once GM is on their feet again, if it happens (although I severely doubt GM will end up going bankrupt). A post-bankruptcy GM would still have all the trademarks and copyrights but none of the onerous UAW burden. In fact, a GM bankruptcy would likely also precipitate a Ford (maybe even also DCX) bankruptcy, just so Ford could compete with the 'new' GM. This would absolutely gut the UAW - - and the UAW members (not the leadership ) realize this.

 

This is really a nobrainer of a poll.

Bankruptcy=Bad.

Bankruptcy=Stock value collaspe and phenominally higher intrest rates for loans.

Bankruptcy=Company parts are sold off to satisfy creditors

Before Bankruptcy was explained here, 99% associated it with the death of a company.


It's really extremely bizzare, baffling, and downright dumbfounding that there is a contengent (even if just a mere 11% at the moment) that actually looks at GM declaring bankruptcy as a good thing, and that they actually remotely believe that the general public would look on this as a positive sign.

To that 11%, I really don't know what to say to you.......

 

Key word: Re-Negotiate. As in sit down with the UAW and go over it all over again. Pull out your own teeth with a pair of pliers and you'll get an idea of what it's going to be like.

GM can decide to close any plants it needs to once a product's life cycle runs it's course.

There's plenty of people on this site that will give you a very good lesson on why suppliers are going out of business. Wanna cut payments even farther? May as well close up US auto suppliers and reopen in China or India.

A certainty.

GM doesn't need to declare bankruptcy to sell off its assets. A court could order assets sold to pay debtors, though. Sort of like a court ordering you to sell your things to pay for your credit cards. Not something you'd want.

Do you really need to ask?

They'd be too busy selling off themselves to be concerned about that. When the dust settled, they certainly wouldn't be any size to take on Toyota.

Again, do you need to ask?

Would be moved to a taxpayer financed government pension insurence agency, where they would get less benefits while federal deficits would be fueled pressuring the feds to jack up intrest rates.

Probally.

They are all part of GM, meaning they would be as decimated as GM-North America.

Again, do you need to ask?

Would you commit thousands and thousands of YOUR hard earned dollars on a product from a bankrupt company, indicating that it might not be around to service your car, or that it may have freedom to modify your warranty, and that your car's value will drop like a ton of lead the day GM files for Chapter 11?


There seems to be a wisdom growing (not just with you, but alot of others here) that bankruptcy is just a game, a card GM can use to reel in those pesky unions. Truth is YOU DO NOT WANT GM TO FILE FOR BANKRUPTCY!

Not just for some of the reasons mentioned above, but also GM is perhaps the only US company capable of singlehandely creating a massive economic recession, let alone ripping apart the entire US auto industry and companies that depend on it.

It would be very easy for GM to simply file and use the leverage to destroy the UAW. It would also be easy for the UAW to retaliate and shut down General Motors..... permanently..... with a strike.

I also really question the morals of someone (and Scott alluded to this in his post) who purposely declares bankruptcy simply to throw thousands of elderly people who gave their entire lives, sweat, and years to GM to the streets by wiping out their pensions & health care. There's a huge difference between changing the rules so they pay a few hundred dollar per year, and simply forcing them into a completely inadequate federal system. As he said, this is simply wrong.


The problem is that many years ago it took many workers to make a car. Over the years, it's taken dramatically less people to make a car due to improved efficiency and automated assembly. When the people today at GM retire, GM will easily be able to provide for them. The problem is the massive number of people from the old days who are straining the system. GM intends to keep them afloat by building alot of profitable vehicles with as few people as possible until the older retirees start dying off within the next few years. By the end of the decade, the problem will be far more manageable.


You really have to appriciate the job Wagoner and company is doing. You probally couldn't pay me enough to have his job and responsibilities that far exceed GM's current workforce. And despite the rants of one ignorant "BM", Rick's doing a hell of a job so far. I see why so many people at GM are pulling for him when the same circumstances at other companies would have canned the CEO long ago.


If you really want to cure GM's troubles, you'd better consider national health care. We are competing against countries that have it, which frees up money for their companies. It would also eliminate GM's problems overnight and take a chunk out of the UAW's "issues list".

If you aren't for that, then you really ought to be hoping GM rides this storm out, because GM declaring bankruptcy is much like you cutting off a few limbs to lose weight.

 

GREAT post, Guy.

What really frosts my you-know-what is visiting some of these other message boards and seeing Americans actually cheering for GM to go bankrupt. Now, not liking GM cars is anyone's red-blooded American right, but to be that ignorant about how it would affect their friends and neighbors...or even themselves indirectly....