Topic: GM said to be in ‘intense' bankruptcy preparations

[DockMan]

GM said to be in ‘intense' bankruptcy preparations

Reuters
April 7, 2009 at 11:22 AM EDT


NEW YORK — — General Motors Corp. [GM-N] is in “intense” and “earnest” preparations for a possible bankruptcy filing, a source familiar with the company's plans told Reuters Tuesday.

A plan to split the company into a new entity made up of the most successful units, and an “old company” of its less-profitable units, is gaining momentum and is seen as the company's best configuration for the future, said another source familiar with the talks.

The sources asked for anonymity saying they were not authorized to speak on the record.

GM chief executive officer Fritz Henderson has said the company prefers to restructure out of court but could go to court if needed. GM declined to comment further.

http://business.theglobeandmail.com/servlet/story/RTGAM.20090407.wgmbankruptcy0407/BNStory/Business/home

[ovr50]

GM must do this exercise to prepare for bankruptcy in case it is needed. To do otherwise, would be irresponsible.

My guess is that GM will make use of the Bankruptcy laws in one way or another. It would help them solve a few problems with suppliers, unions, etc. The feds have indicated a way that warranties would be covered; so I would be surprised if GM didn't go the bankruptcy route.

[sailor723]

Well,if they can lose the debt,restructure their labour costs and dealer network while maintaining warranty coverage and customer relations it makes perfect sense.

[tpl]

and furthermore:

Ottawa backs GM, Chrysler warranties

Shawn McCarthy, The Globe and Mail
April 07, 2009

The federal government will spend up to $185 million to back warranties on vehicles sold by General Motors of Canada Ltd. and Chrysler LLC, matching an effort by the U.S. government to ensure the companies' financial troubles don't lead to a collapse in sales.

Industry Minister Tony Clement announced Tuesday that Ottawa would also provide an additional $700 million to the Export Development Corp. to ensure accounts receivable for Canadian parts manufacturers.

The industry minister made the announcements amid growing speculation that GM is preparing to file for bankruptcy protection in the U.S. and Canada. Chrysler also faces bankruptcy if it can't conclude a strategic partnership with Italy's Fiat SpA and negotiate new cost-cutting deals with its unions by the end of the month.

Governments in Washington and Ottawa have suggested the two companies may have to file for bankruptcy protection if they cannot hammer out acceptable deals with unions, debt holders and suppliers to cut costs and present a viable plan for the future. To mitigate the devastating impact such moves, or even talk of such moves, could have on vehicle sales, President Barack Obama announced two weeks ago that the U.S. government would insure the warranties on Chrysler and GM cars.

Clement said that the Canadian warranty program – which covers all new GM and Chrysler vehicles purchased as of Tuesday – will assure consumers that they can purchase vehicles from the two troubled companies and have confidence in the five-year warranties.

He said the program will last as long as the companies' financial future remains uncertain.

Canada exports some 85 percent of the vehicles assembled here, and members of Parliament have questioned the value of a guarantee on warranties, since it will largely apply to vehicles that are assembled elsewhere. Canada accounts for about 10 percent of North American vehicle sales.

But Clement stressed that Ottawa is co-ordinating its efforts with Washington to ensure the auto industry survives its restructuring, and, as a result, will provide similar protection for the troubled automakers as the U.S. government has announced.

The minister said Canadian parts suppliers are having trouble raising operating capital because they can't assure lenders that they will be paid for the parts they sell to GM and Chrysler. The additional money for the EDC – on top of $550 million already provided – will allow the Crown corporation to expand its program of insuring those receivables, which should assist the suppliers in obtaining credit.

I wonder how much the stock market will go up when these companies finally go into Ch 11. 




 

[PJungnitsch]

In that previous thread on GM bankruptcy split, GM Canada was mentioned as a possible 'bad' part of GM, to be divided off and ditched.

Not that GM Canada wasn't profitable, but something else, IIRC pension obligations were not as well funded north of the border, so we'll go in the same trash basket as Hummer and Saturn.

Hopefully that doesn't play out.

[Honda Owner]

Bankruptcy is about the only course left for GM and it is a sad day for the tens of thousands of workers who will lose their jobs. It is, unfortunately, much of a surprise. GM is going to close half its plants but can it change its corporate culture that caused this calamity in the first place?

I predict three divisions will survive: Chevrolet, Cadillac and trucks.

[safristi]

"intense bankruptcy".......gotta love those  Casual SEXRUPTYCYIES.......... ..woz it expungent fer U dear......NO it woz DEAR for U doofus...........

[Cortina]

If I was a Chinese car maker I would be chomping at the bit. You've got all the infrastructure here. The whole 9 yards in fact. Here is your chance to break into the NA market. That what I been thinking as late.

[toolatecrew]

So the Government loaned these guys how many Billion so they could file for bankruptcy?

Most have been saying from the start Chapter 11 Chapter 11..but NOOOO the Governments have to loan them Billions so they can lay out some lame unrealistic plan, lend them billions more and give them an extension to come up with a plan that is just as lame so they can then file for Bankruptcy?

Warranty? GM I can understand consumers need that confidence so that GM can emerge from bankruptcy.

But Chrysler? They are already failing to reach an agreement with CAW, unlikely to complete a successful merger with fiat, threatening to pull production from Canada and the government has liens on their pants for taxes. They want to back their warranty? For what?

[articsteve]

Just bought some shares in the company behind Preparation H.  Gonna be a huge need soon for anyone associated with GM.

[Careener]

It's a done deal. 53 days or so and counting.

[barrie1]

If its a done deal why hasen't it happened already? Obvously its not all done yet. Just out of curiosity why do the Japanese cars cost as much as the North American vehicles when the wages are supposibely so much much lower? Have a good comparison look at all the prices for similar models as the quality is all about the same now. They should be thousands of dollars less but they are not at all. Why is that I wonder? 

[Honda Owner]

I

f its a done deal why hasen't it happened already?

Because Obama has cut off their corporate welfare, Barrie, in about 52 odd days. The entire value of GM stock could not pay its suppliers what they are owed, Barrie. I know it is like losing Jesus for Barrie, but GM is bankrupt. The company's debts far exceed it's net worth. That is bankruptcy and tossing more taxpayer money at it is useless. What has been wasted has just gone down a bottomless pit.

What a horribly mismanaged company.

Barrie, Honda and Toyota have created 30,000 jobs in Canada without one cent of corporate welfare. And actually, Japanese cars cost more than GM junk because people are willing to pay more for them. This is why they are not ponied up at the taxpayer's trough like your beloved welfare case, GM.

as the quality is all about the same now.

If you live in a dreamland, you believe this. Get a copy of the April Consumer's Reports.

[initial_D]

If I was a Chinese car maker I would be chomping at the bit. You've got all the infrastructure here. The whole 9 yards in fact. Here is your chance to break into the NA market. That what I been thinking as late.

It will be a while for Chinese companies to setup shop in NA, they have no experience in managing a large number of Foreign workers in a Foreign country, and it is risky business.

[tenpenny]

I noticed the idea that one of the 'obligations' that bankruptcy will allow GM to get away from is their suppliers.

I wonder where they'll get parts, if they leave suppliers hanging?  Who'll be willing to do service and maintenance on a GM factory, if they've stiffed the existing suppliers?

If I was a supplier, and GM did this, I'd want cash up front before supplying anything else to them.  And, my prices would go up by 30 to 40%.  I can't see anyone extending any credit to GM under these circumstances, but you never know, obviously people in this business aren't very smart.

[TopGun]

Barrie, Honda and Toyota have created 30,000 jobs in Canada without one cent of corporate welfare. And actually, Japanese cars cost more than GM junk because people are willing to pay more for them. This is why they are not ponied up at the taxpayer's trough like your beloved welfare case, GM.

Have you had everyone on "ignore" HO?

From Barrie...as the quality is all about the same now.

If you live in a dreamland, you believe this. Get a copy of the April Consumer's Reports.

Again with the Consumer Reports.  Tell ya what...I've wasted enough time.  I'd attach all of the discussion related to Consumer Reports within this forum, but I'm afraid it might add some complexity to the situation.

[safristi]

McSquinty just "announced"  the obvious.............the Pension Insurance guarantee scheme can NO WHERE NEAR meet GM' pensioners promised retirement..................has about $100Million left innit..............maybe a years payout and the rest of us are facked if some of our Cmpany  Pensions  go titsup.......

[initial_D]

I noticed the idea that one of the 'obligations' that bankruptcy will allow GM to get away from is their suppliers.

I wonder where they'll get parts, if they leave suppliers hanging?  Who'll be willing to do service and maintenance on a GM factory, if they've stiffed the existing suppliers?

If I was a supplier, and GM did this, I'd want cash up front before supplying anything else to them.  And, my prices would go up by 30 to 40%.  I can't see anyone extending any credit to GM under these circumstances, but you never know, obviously people in this business aren't very smart.

That is step two. First step is ensure everything looks good on paper, how to get to the next one is rather irrelevant (from their existing business practices).

[initial_D]

If its a done deal why hasen't it happened already? Obvously its not all done yet. Just out of curiosity why do the Japanese cars cost as much as the North American vehicles when the wages are supposibely so much much lower? Have a good comparison look at all the prices for similar models as the quality is all about the same now. They should be thousands of dollars less but they are not at all. Why is that I wonder? 

Pay attention and concerns about the fire that is burning down the house, don't worry about the neighbor's BBQ.

[barrie1]

Consumer reports which is a American publication has a only and not the final say on anything. I also have it here for the last 3 weeks as well. GM still sold how many million vehicles around the world last year? Their quality ratings are way up there with many others and much higher then many as well. No magazine can prove that different just by writing something.