GM bankruptcy plan eyes quick sale to government

May 20, 2009

http://ca.news.yahoo.com/s/reuters/090519/business/cbusiness_us_gm_bankruptcy

Tue May 19, 4:47 PM

By Chelsea Emery and Tom Hals

NEW YORK (Reuters) - If General Motors Corp files for bankruptcy, as widely

expected, its healthy assets will be quickly sold to a new company owned by the

U.S. government, a source familiar with the situation said on Tuesday.

The source, who was not cleared to speak with the media and would not be

identified, said the U.S. government would pay for the assets by assuming the

automaker's $6 billion of secured debt and forgiving the bulk of the $15.4

billion of emergency loans that the U.S. Treasury has provided to GM.

The government is negotiating the terms on which it will assume GM's secured

debt and might make an the offer to holders of the debt that is far superior to

the one made to Chrysler LLC's secured lenders, the source said.

Chrysler filed for bankruptcy in April and has proposed paying its secured

lenders about 28 cents on the dollar.

The new GM is likely to distribute stock in the company to GM's unions in return

for concessions on wages and benefits, the source said.

The percentage of stock given to the unions, bondholders and other creditors

whose debt is not repaid by new GM has not been determined, the source said.

In addition, the government would extend a credit line to the new company, the

source said.

The remaining assets of GM would stay in bankruptcy protection to satisfy other

outstanding claims.

The government has given GM until June 1 to restructure its operations to lower

its debt burden and employee costs as sales have plummeted in recent years.

DELPHI, HENDERSON

GM will likely take on some of the operations of its bankrupt supplier Delphi

Corp to make sure it gets needed auto parts throughout its reorganization,

according to the source. The company is currently negotiating terms with

Delphi's estate, the source said.

Delphi, a former unit of GM, has been operating in bankruptcy since 2005.

The board of the new company would be established with the tacit approval of the

government. Fritz , who took the helm of GM earlier this year after the

government pushed out Rick Wagoner, will head the new company, the source said.

Setting up a new company to buy the healthy assets is aimed bringing operations

out of bankruptcy as quickly as possible. GM is concerned that consumers might

not be willing to make a major purchase from a bankrupt company, fearing it

would not honor warranties or provide service.

Chrysler is employing a similar strategy in its bankruptcy. The smaller

automaker is selling its operations to a group that will be managed by Italian

automaker Fiat and wants to have the strongest operations out of bankruptcy in

60 days.

Chrysler's proposed sale ran into initial opposition from holders of the

company's secured debt, and GM may face similar issues.

Investors who hold GM's senior secured debt said they are not aware of any

negotiations and that they would oppose having the debt move with the healthy

assets.

" If that's right, they will be in for a fight, " said one investor, who declined

to be identified.

The investors said GM could not force the transfer of the secured debt without

the agreement of all the holders of that debt.

The investors also opposed giving bondholders anything without first paying in

full the claims of senior secured lenders, who have higher priority in

bankruptcy.

GM could not be immediately reached for comment.

GM shares closed up about 8 percent at $1.27.

(Editing by Gerald E. McCormick and Steve Orlofsky)

May 20, 2009

Maybe the government will be able to make the least loss possible for the

taxpayers possible... but where government gets involved, you can't count on

that: look at Social Security, where they keep robbing (our future) to pay

(other things along the way). I have a very strong suspicion that the

amount of money involved, at least in the next couple of years, towards turning

General Motors into Government Motors will actually save quite a bit of

taxpayer's money, but all goes to hell quickly the longer any government runs

such an enterprise, and that's where the biggest long-term taxpayer's money

hairball comes in.

Government has its place, but I firmly believe that is in enacting legislation

and enforcing it to keep things... governed in an orderly fashion, and to deal

with such things as public infrastructure (schools, roads, environmental

management) national defense and making treaties with other countries, etc. but

beyond the Post Office, as much as possible, government should not be involved

in doing the business of doing business.

>

> This is the article I referenced in another post.

>

> Basically, the government is looking to screw the taxpayers out of $15

> billion of bailout money, much of which went to the labor unions. Now under

> this deal, it looks like the unions will get billions more. Now that the

> government is running the auto companies, is it any wonder they are being

good

> little Renfields and slobbering all over Obama's demands for measure that

> will destroy the auto industry?

>

> Given that millions of manufacturing jobs have been lost in the last year,

> and millions more in the 15 years before (counting back into the Clinton

> administration), it makes one wonder. I know that a number of ecogroups want

> to destroy as much industry in the US as possible in their mad quest to cut

> carbon emissions. They may well succeed, but of course, all that will

> happen is manufacturing will go to nations with few or no environmental laws,

> so net pollution will still increase. At the same time, because we no longer

> make anything, our money will be increasingly worthless and we won't be

> able to buy the things made in those other countries, so our economy is

> really going to crash.

>

> The people in charge just don't have a clue, but then, none of that have

> for the last 20 years or so.

>

> In a message dated 5/19/2009 9:06:56 P.M. Eastern Daylight Time,

> no_reply writes:

>

> GM bankruptcy plan eyes quick sale to government

>

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May 20, 2009

The American economy grew like it did in large part because the government was small and limited. Where it has gotten involved, it almost always causes more harm than good. We are going to see that again very shortly given how vastly government is expanding and interfering in the economy. All we have to do is look at England to see what our future will be like within a decade at most.

The Post Office is a good example of something the government should be doing. It provides a good service of delivering letters and packages. It is suffering now from the internet, but the service is still useful. I do think that it is silly to try to force the PO to make a profit or function like a private business. It can't and it shouldn't have to. Some have said that we should just go with UPS, DHS, or FEDEX instead, but that would be a waste of resources. Think about it. Rather than having one postal carrier park in a neighborhood and deliver the mail the many houses, those other companies would each have to sent a truck to each house, many more than one to the same house, all depending on who sent the material in question. Major duplication of services and waste.

AMTRAK is an example of something the government should be doing, but is doing it badly. When it was founded, AMTRAK had about 4 times as many rail miles as it does today and more is being lost. Part of this is because, like the Post Office, some members of Congress think AMTRAK should turn a profit and cut its funding. It is hypocritical that they would then pass bailouts and subsidies for the airlines and see nothing wrong with doing so and still calling an industry that couldn't function without federal money private. The other problem is that AMTRAK runs on rails largely owned by the freight companies and freight trains get first choice in scheduling. This can make for some very long and aggravating delays. Otherwise though AMTRAK is a nice way to travel with comfortable compartments and pretty good food. If it could be fully funded, the rail service expanded again, and passenger trains given first priority, it could be made to work. If Europe could build a continental train service between many nations with their own laws and regulations, then surely we could build a rail service that is first rate.

In a message dated 5/19/2009 11:52:28 P.M. Eastern Daylight Time, no_reply writes:

Government has its place, but I firmly believe that is in enacting legislation and enforcing it to keep things... governed in an orderly fashion, and to deal with such things as public infrastructure (schools, roads, environmental management) national defense and making treaties with other countries, etc. but beyond the Post Office, as much as possible, government should not be involved in doing the business of doing business. Dell Inspiron 15 Laptop: Now in 6 vibrant colors! Shop Dell's full line of laptops.

May 20, 2009

What you are seeing is government busywork. The government usually does thing like this to keep the unemployment rate artificially low. By constantly building things, people keep jobs. However, these are expensive jobs because they are government jobs. If the government cut taxes simply by doing less building of its own, then they should get more private businesses who could hire some of those people.

In this town, they just built a big, brand new hospital to replace the old one. The building is old, but the main problem seems to be that it is in the middle of a high crime area that can't be cleaned up, so the new one is on the edge of town. Two points about this place.

1. Even though it was in the "inner city," it frequently sent the non-paying poor and others to the private hospital in the neighboring city.

2. Even though the hospital has a new building, it still has the same staff, which was part of the problem. I'm not sure what the state rating is for that hospital, but I have known people who were having a health crisis and they had friends or family drive them to the next town to the hospital rather call 911 since the ambulance would have taken them to the one here.

Also, if the Canadian government spent less money on useless building and spent that money on things like MRI's and CAT scan machines, their quality of health care should improve through reduce wait times.

In a message dated 5/20/2009 12:00:24 P.M. Eastern Daylight Time, no_reply writes:

Sounds great, except that the Canadian government does tend to throw much needed money in two other needless directions: Schools and hospitals. I've seen so many abandoned schools and so many new ones up here that it is unbelievable. Likewise, the government always seems to be tearing down old hospitals and putting up new ones. Health clinics are the same way. They are tearing down old clinics and building new ones. Dell Inspiron 15 Laptop: Now in 6 vibrant colors! Shop Dell's full line of laptops.

May 20, 2009

"Government has its place, but I firmly believe that is in enacting legislation and enforcing it to keep things... governed in an orderly fashion, and to deal with such things as public infrastructure (schools, roads, environmental management) national defense and making treaties with other countries, etc. but beyond the Post Office, as much as possible, government should not be involved in doing the business of doing business."

I have a different perspective on things having travelled back and forth between the US and Canada so many times. In the US, it seems the government is constantly building new roads or re-doing old ones. How many times have we opened a newspaper to read "Study being done on new interstate corridor?"

Up in Canada, there are fewer roads, and fewer road projects but more public transportation. (In part the fewer road projects are because Canada ties its builders into decades long maintenance contracts, and so the builders build the roads extrememly well so the builders don't have to dump money into fixing them or replacing them over the decades. When you hire contractors for a one-time job the way state and the US government does, the result is trying to get the job done as cheaply as possible as quickly as possible with as many corners cut as possible).

Sounds great, except that the Canadian government does tend to throw much needed money in two other needless directions: Schools and hospitals. I've seen so many abandoned schools and so many new ones up here that it is unbelievable. Likewise, the government always seems to be tearing down old hospitals and putting up new ones. Health clinics are the same way. They are tearing down old clinics and building new ones.

So the government would appear to have the best schools and the best hospitals. The problem is, school districts are underfunded due to budget shortfalls, so there is poor funding per student and there is also a doctor shortage. So education is poor and so is healthcare.

You could have a hospital three blocks away, and you would think that you could get the operation you need there, but instead you have to drive six hours away to another hospital to get it because there are no doctors available to perform the surgery.

Here is a letter worth reading, and this letter will show you what Obama and his moron Democrats are trying to put in place for US citizens:

Wrong! After just two days in Kingston General, my wife was sent home to await a cardiac MRI and the EKG booked for May 18, also in Kingston. Two days later we received a call from Kingston to tell us that the procedures had now been put off for a further two weeks, until May 28. On Thursday her attacks returned and she is now back in PRHC.

We were told that only two cardiac MRIs procedures are done at Kingston General per week, apparently lasting about one hour each. This doesn't seem to be a very practical use of such a valuable resource. Yet the Liberal government keeps reminding us that health resources will become more centralized and concentrated, and put to much wider use, so as to enable better accessibility for more patients in need.

As a senior whose wife continues to work we now had two concerns, the first one being her health, and could something happen again during the waiting time, and the other, a pressing concern about her income.

Anyone that has not been through this Catch-22 situation, I would suggest needs to consider the following.

The Ontario ministry of health tells you that it is improving on cutting wait times, my answer is poppycock!

March 9 to May 28 is almost three months, and because a cardiac MRI does not guarantee that you will be back at work the following day, you could be waiting for an additional procedure, very much after that date.

As you could endanger yourself, or another person, you are now told that you cannot return to work, as you could cause a client in your care some harm, nor are you allowed to drive a vehicle.

The employment insurance program will only cover a person for a maximum 15 weeks at 55 per cent of their pay, when sick, so because wait times here in Ontario are so long you could be in real financial difficulties.

Don't let anyone kid you that the Liberal government is doing all it can to improve our health care system in Ontario. If it is doing anything at all, it's falling further and further behind in North America, in ensuring its people have responsible and timely health care for all.

GRAHAM HAWKRIDGE Pontypool Road

Pontypool