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U.S. plans to ease GM into "controlled" bankruptcy: report

Discussion in 'Political Zone' started by WoodysGirl, Apr 1, 2009.

  1. WoodysGirl

    WoodysGirl Shut up and play! Staff Member

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    WASHINGTON (Reuters) – The Obama administration is seeking to ease General Motors Corp into a "controlled" bankruptcy by persuading some creditors to agree to a plan that would divide the company into two pieces, the New York Times reported on Wednesday.

    Citing people briefed on the matter, the Times said the plan is to push GM into a structured bankruptcy "somewhere between a prepackaged bankruptcy and court chaos," using taxpayer financing for leverage.

    The administration is drawing in part from its experience with troubled banks, seeking to create a new, healthier GM, but leaving behind its liabilities and less valuable assets, possibly for liquidation, the Times said on its website.

    Under the plan, GM would file for prearranged bankruptcy, the report said, and would then use a sale authorized under Section 363 of the U.S. bankruptcy code to sell off desirable assets to a new company financed by the government.

    These more valuable assets might include Cadillac and Chevrolet, as well as assets the company needs to run its business, the Times said.

    Plans are still under discussion and details are subject to change, the report said.

    GM officials warned on Tuesday there was a rising chance it could file for bankruptcy by June.

    One plan under discussion would be to form a new company of the automaker's best assets, while laggard brands and money-losing assets would remain under bankruptcy protection, a person familiar with that strategy told Reuters.

    President Barack Obama's thinking on the crisis facing GM has not changed since Monday, a senior administration official told Reuters on Tuesday.

    "Nothing has changed on this," the official said when asked about a Bloomberg report that the president has determined that a prepackaged bankruptcy is the best way for GM to restructure and become competitive. "This report is not accurate."

    The White House wants the 60-day period for GM and a 30-day period for Chrysler to play out, as announced by the president on Monday, the official said, speaking on condition of anonymity.

    (Additional reporting by Kevin Krolicki and Jeff Mason in Washington and Soyoung Kim in Detroit; writing by Todd Eastham; editing by Lincoln Feast)

    http://news.yahoo.com/s/nm/20090401/ts_nm/us_autos_report_sb
  2. ShiningStar

    ShiningStar Well-Known Member

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    Is Ford going crazy? Why is this government dead set on saving this company? How much did they pay into the DNC presidential election? What is going on here?
  3. WoodysGirl

    WoodysGirl Shut up and play! Staff Member

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    Ford or GM?

    I think the goal is to try and manage the impact of a GM bankruptcy on the economy as much as possible.

    It may not be too big too fail like the banks, but the job losses would still be massive, not just on the assembly plants, but suppliers, and dealers, as well.

    Save what you can, trim the fast as much as possible, and the move on..
  4. JBond

    JBond Well-Known Member

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    I'm still waiting for Obama to fire the head of the UAW. The union is equally culpable in the demise of GM. Because the President now has the authority to hire and fire whoever he feels like whenever he feels like it, he needs to get rid of the corrupt unions leaders.

    A $160,000 (including benefits) a year to build cars is insane.
  5. ShiningStar

    ShiningStar Well-Known Member

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    I say Ford, because if the bailout never happens, Ford wins. GM is going down hill and still the government wants to save it and do whatever it takes to keep it afloat.

    This whole to big to fail is a crock. If Gm goes down and Ford gets bigger, it could swallow up some of those are out. Most of the Gm folks would probably get together and start another car business and bring back its people, or just retire and see what you have left.

    GM brought this on themselves and have every right to be on the street looking for new jobs.
  6. iceberg

    iceberg detoxed...part 2 Zone Supporter

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    initially yes, wg. the losses would be bad. but how much is it costing us to restructure and allow our government to fire a private sector employee (resign if you prefer to be PC), then "control" (obama loves that word) the bankruptcy, then divide the company - what will be left?

    then, if it did fall, what opportunity does that open up for aftermarkets to kick in to support GM vehicles for a long time to come still? provide warranties and services specific to the brand?

    what opportunties does that give other "lean and hungry" companies to step up and bring on the old so THEY can grow?

    there are 2 sides to the fall. with the gov taking "control" of GM, it's just another step, to me, towards more of what i simply don't want - the gov making my choices in life.
  7. WoodysGirl

    WoodysGirl Shut up and play! Staff Member

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    Ford didn't take the bailout, because they'd previously arrange some high interest capital loans. However, I think it's been reported they're just as much on borrowed time as GM. Maybe a year, at best.

    My brother works for one of the Ford plants and his work schedule is iffy at best. One month he's working consistently and the next he's off for two weeks. I don't know. I don't see Ford as any better shape than GM.

    Correct me if I'm wrong, but in any bankruptcy, doesn't the gov't control the bankruptor (for lack of a better word)? I read up on it some time ago and it seems the judge pretty much controls your finances for the time that you're in bankruptcy. I would think that this whole GM thing falls right in line with that scenario.

    I realize you think that some other company would come along to take up the slack...and maybe one would, in time. One always does. However, the initial carnage of it all makes me cringe, on a personal level, as well as just in general. I've gone through enough layoffs and unemployment processes to last a lifetime. It'll get worse before it gets better.

    I think it's a bad idea to oust the CEO, but it's something the board should've done years ago. It doesn't make it right that Obama did it, but I can't get as upset about it as much either.
  8. iceberg

    iceberg detoxed...part 2 Zone Supporter

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    quite possible, wg. that's why i rely on who i view to be the "sane" posters in here to help correct me when i'm wrong - either by idea or terminology.

    yes, the head of GM should have been fired. By GM.
    yes, whoever made the stupid contracts that are now killing GM should be fired.
    yes, the unions who demanded higher pay to sit in a box and put a bolt on a car in one spot only should be flogged.

    i worry that every time something hurts we look to someone else to fix it vs. ourselves. then after it becomes habit, we demand someone to fix all the injustices in the world. in my mind we've (myself included) have become soft over the years and complacant into everything being quickly done.

    i simply do not want a government who's out to save everything with strings and conditions. i'd be more ok with it if our own government were not as screwed up as well. it's like the blind leading the blind only 1 blind person has the ultimate authority to determine direction.

    i know it would hurt and i know it would take time to recover. but how better off would we be in the end?

    let GM fall and let all the stupid decisions they made to build this house of horrors die. trying to save it will spawn dozens of internal groups all in a power struggle for their own slice of the pie and people fight to keep getting benefits they "earned" decades after their retirement.

    what i hate most of all is the precidence this sets to "nationalize" some businesses that are run according to government policy. maybe it's not socalism but it is more and more government control.

    i want the ability to do what our country has always done - fend for myself and go as far as i can go. yes there are bad dudes along the way who will profit by wrong means.

    there always has been. likely always will be. but we've seem to come to a point we feel we must micromanage everyone but ourselves and lay the blame in the same manner.

    i put myself into near $40k debt. i pulled myself out to less than $1k now. i want to beat the holy hell out of the arseclowns on the radio saying crap like "it's your right to pay a lot less than you agreed to!" and make people think their own problems are caused by the evil around them vs. the stupidity within.

    i don't like the mindset that every time something hurts you cry and the government, or someone else will fix it.

    stay down, we'll take care of this.

    we just seem to be at a crossroads in time where no one really knows what's going on. while i'm ok with the head of GM being unemployed, i'm not ok with our government stepping in to fire him, set demands on the business, break it up if they feel like it (remember i went through a decade or so of BREAK UP MICROSOFT, so i know it sucks) and determine how a business should look and run.

    the role of our government, to me, is to set the infrastructure for commerce, security in our armed forces (not private citizens running around with a beanbag gun yelling in a gomer pyle manner CITIZENS ARREST!!!) and provid e foundation we build on top of. right or wrong.

    when we fall, we pick ourselves up. when we hurt, we fix it ourselves. when someone insults my background, i move on, not take them to court.

    i don't disagree the initial carnage makes me cringe. totally agree there, wg. but long term - which is better? prop up a failed model and fight through all the red tape it's created...

    ...or start over with a young company ready to introduce us to the next way of doing things?

    let innovation do what it does and now is the perfect time for it to do it. 10 years later we can still have GM putting out the wonderful saturn type cars, or we can have others more in touch showing us what they can do.
  9. BrAinPaiNt

    BrAinPaiNt Bad Santa Staff Member

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    I did not realize that the UAW went to DC in front of congress begging for bail out money.

    When did that happen?

    Oh wait...It didn't happen.

    Nice rant though...I guess.:rolleyes:
  10. iceberg

    iceberg detoxed...part 2 Zone Supporter

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    well, they did go to GM demanding it and in the end got some crazy things agreed to. understand your point but one of my concerns is - what happens to all these butt-nugget type deals GM did over the course of it's life - are they gone and those who *had* benefits now lose them?
  11. Jarv

    Jarv Loud pipes saves lives. Zone Supporter

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    What happens to the UAW if GM goes out of business ?
  12. WoodysGirl

    WoodysGirl Shut up and play! Staff Member

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    UAW will still be around because they have union workers with Ford, Chrysler, and some in Toyota, as well.

    Edit: Just looking at their website, they've got members in all sorts of industries outside of the automative industry. They're not going out of business anytime soon.
  13. DaBoys4Life

    DaBoys4Life Benched

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    I say let them tank.
  14. ShiningStar

    ShiningStar Well-Known Member

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    So what we say to small businesses is "you're not big enuff to let die, so its kewl to let you go".. Okay, makes sense.

    its not longer a market where the best idea wins, its whos to big to fail and who donates more to which party in power.

    I see small business owners banging their heads on their desks.
  15. DaBoys4Life

    DaBoys4Life Benched

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    That's what I was telling my uncle even if we let these big companies fail their will be smaller companies that spring up and take it's place. Or the companies will change policy and procedures and have their budget be reasonable. Whether it be layoffs or taking away benefits there's a way however, considering how comfortable these business are they aren't willing to do that.
  16. burmafrd

    burmafrd Well-Known Member

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    You will not see any american auto makers taking up any slack. Even if Ford does survive, while GM and Chrysler do not, it will be TOyota and company that will in the end benefit.
  17. iceberg

    iceberg detoxed...part 2 Zone Supporter

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    bullcrap.

    if there's a need, innovation and smart people will rise up and fill the need.

    then the gov will tax the hell out of their success.
  18. MetalHead

    MetalHead Benched

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    I understand that unions are not allowed in Toyota.
  19. BrAinPaiNt

    BrAinPaiNt Bad Santa Staff Member

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    Again the point was someone asked why Obama does not order the UAW to step down or fire the head of the UAW....well because this was only for the companies and CEOs that accept bailout money. Not head of unions.
  20. BrAinPaiNt

    BrAinPaiNt Bad Santa Staff Member

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    I might be completely wrong here but I think I heard that Toyota does have some union workers but I was thinking it was overseas. Again I could be wrong about that.

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