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  1. #1
    Minister of Propagandhi ajblaise's Avatar
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    Default GM Must Quickly ‘Do More’ as Bankruptcy Threat Grows

    March 31 (Bloomberg) -- General Motors Corp. faces a structured bankruptcy managed by the U.S. government if the company can’t meet a deadline to drastically reduce debt in the next 60 days.

    GM Chief Executive Officer Fritz Henderson, on his second day running the largest U.S. automaker, said yesterday that a strategic bankruptcy with government backing is less risky than traditional Chapter 11 protection, though it’s still not GM’s preferred method of survival.

    “I think bankruptcy is a very viable option, much better than a receivership,” said Ken Klee of Klee Tuchin Bogdanoff, a bankruptcy firm not involved with the automakers. “It needs to be treated as though it’s in the emergency room.”

    Henderson takes over at the largest U.S. automaker after President Barack Obama’s auto task force on March 27 asked Rick Wagoner to resign as CEO. That request followed the group’s decision to reject GM’s plan to return to profit. Henderson, 50, was tapped to push through a new plan with bondholders, unions, dealers and others after a March 29 GM board meeting.

    “We need to do more and do it faster,” Henderson said on a call with reporters yesterday.

    At stake is $27.5 billion in GM debt that bondholders have been reluctant so far to exchange for equity and $20.4 billion in obligations to a union-run health care fund. It isn’t clear whether the government is using bankruptcy as a threat to hasten the exchange.

    ‘Meaningful Progress’

    “While the company has made meaningful progress in its turnaround plan over the last few years, the progress has been far too slow, allowing the company to continue to lag behind the best-in-class competitors,” according to a task force report.

    Obama said yesterday that company creditors, shareholders, workers, dealers and suppliers will be expected to make more sacrifices.

    “We believe that there could be a viable business within GM if the company and its stakeholders engage in a substantially more aggressive restructuring plan,” the Obama task force report said.

    White House spokesman Robert Gibbs said the administration isn’t pushing for bankruptcy and there’s “no pre-determined deal.”

    “If that was the case we would have done that today,” Gibbs said in an interview yesterday. “Where this ends up is going to be determined in the next 30 to 60 days.”

    .....
    GM Must Quickly ‘Do More’ as Bankruptcy Threat Grows (Update1) - Bloomberg.com

    Our manufacturing industry is seen as much less viable than our financial system, which more think is worth saving, so I'm not surprised that the auto industry is being treated tougher. Japan would never let Toyota or Honda go bankrupt, because their auto industry is seen as having a future, while we have been getting use to the idea of losing auto and manufacturing jobs.

  2. #2
    Order Now! pure_mercury's Avatar
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    Companies that cannot survive on their own should go into bankruptcy, either Chapter 7 (like this) or Chapter 11 (if they're no-hopers).
    Who wants to try a bottle of merc's "Extroversion Olive Oil?"

  3. #3
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    Quote Originally Posted by pure_mercury View Post
    Companies that cannot survive on their own should go into bankruptcy, either Chapter 7 (like this) or Chapter 11 (if they're no-hopers).
    Actually, I think it's chapter 11 that reorganizes a company, and chapter 7 that completely dismantles it. Obama is talking about working with chapter 11.

  4. #4
    unscannable Tigerlily's Avatar
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    can i have a new car first or at the very least a heavily discounted one?
    Time is a delicate mistress.

  5. #5
    Order Now! pure_mercury's Avatar
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    Quote Originally Posted by Risen View Post
    Actually, I think it's chapter 11 that reorganizes a company, and chapter 7 that completely dismantles it. Obama is talking about working with chapter 11.

    No, you're right. My transposition tendency jumped out right there. And I think Chapter 13 is the personal reorganization?
    Who wants to try a bottle of merc's "Extroversion Olive Oil?"

  6. #6
    The Unwieldy Clawed One Falcarius's Avatar
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    Pure_merc, what is the difference between Chapter 7 or Chapter 11 bankruptcy? And do we have an equivalent in the UK to either?
    Quote Originally Posted by Thalassa View Post
    Oh our 3rd person reference to ourselves denotes nothing more than we realize we are epic characters on the forum.

    Narcissism, plain and simple.

  7. #7
    Order Now! pure_mercury's Avatar
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    Quote Originally Posted by Falcarius View Post
    Pure_merc, what is the difference between Chapter 7 or Chapter 11 bankruptcy?
    Basically, one liquidates the company and you start over. The other is a government-sanctioned reorganization that involves debt restructuring, slimming the company down in size, expenditures, etc. I am sure I will be able to answer more satisfactorily after I get my MBA.
    Who wants to try a bottle of merc's "Extroversion Olive Oil?"

  8. #8
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    Quote Originally Posted by pure_mercury View Post
    Basically, one liquidates the company and you start over. The other is a government-sanctioned reorganization that involves debt restructuring, slimming the company down in size, expenditures, etc. I am sure I will be able to answer more satisfactorily after I get my MBA.
    One key point here is that they will be able to renegotiate the union contracts if they file for chapter 11, by court order. It's impossible to keep the company going without forming sustainable agreements with the parasitic unions. I believe part of the reason they weren't allowed to just go bankrupt in the first place was because of the union lobby in Washington, knowing that bankruptcy would mean that they lose.

  9. #9
    Order Now! pure_mercury's Avatar
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    Quote Originally Posted by Risen View Post
    One key point here is that they will be able to renegotiate the union contracts if they file for chapter 11, by court order. It's impossible to keep the company going without forming sustainable agreements with the parasitic unions. I believe part of the reason they weren't allowed to just go bankrupt in the first place was because of the union lobby in Washington, knowing that bankruptcy would mean that they lose.

    I wouldn't call the unions "parasitic." If those companies had had any backbones, they wouldn't have signed those retarded contracts with them. Unions are there to sign the best deal possible for themselves, and management is supposed to sign the best deal possible for the shareholders. They all grew fat and happy for decades, and then the world passed them by. Fuck 'em. I drive a Toyota and it's the best car I've ever owned. They're actually building new plants in the United States.
    Who wants to try a bottle of merc's "Extroversion Olive Oil?"

  10. #10
    The Unwieldy Clawed One Falcarius's Avatar
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    Quote Originally Posted by pure_mercury View Post
    Basically, one liquidates the company and you start over. The other is a government-sanctioned reorganization that involves debt restructuring, slimming the company down in size, expenditures, etc. I am sure I will be able to answer more satisfactorily after I get my MBA.
    Okay, the reason I asked is because when I am half asleep I listen to the financial news in the middle of the night, as listening to them go on about the FTSE, NASDAQ, and Dow Jones is normally more than enough to put anyone asleep.

    Well, the other week or so I could not get to asleep, and they were talking about some British company (most probably a shop or bank), saying in the US they have Chapter 11 (I think) and they would get time to reorganise it. One of the people seemed to be saying we don't have a equivalent here, so it either goes into administration - is asset stripped (any profitable parts are sold off) or it is liquidated - or it is nationalised; he was suggesting companies that just need reorganising go under as we don't have a Chapter 11 (or whatever it is). Where as the other guy was saying it does not really matter as any decent administrator should reorganise any failed company if at all possible any.

    Hence, why I was wondering how bankruptcy laws work and which of the two people was right?
    Quote Originally Posted by Thalassa View Post
    Oh our 3rd person reference to ourselves denotes nothing more than we realize we are epic characters on the forum.

    Narcissism, plain and simple.

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