GM Bankruptcy seems almost certain in early June

[Reaper]

GM early payments: Another bankruptcy signal

Automaker agrees to about $2 billion in early payments to suppliers, ahead of deadline for possible bankruptcy.


NEW YORK (CNNMoney.com) -- In another sign the company is preparing for a possible bankruptcy filing within the next two weeks, General Motors has agreed to speed up payments to 1,500 suppliers who provide it with the parts it needs to make cars in North America.
The company typically pays its suppliers during the first week of every month. The next payment was originally scheduled for June 2. But GM spokesman Dan Flores said the June payment has been moved up to May 28 to help its suppliers in the face of current "market uncertainty."
That uncertainty is due to the fact that under bankruptcy law, once a company has filed for bankruptcy court protection, it is not allowed to make payments to people or entities it owes money while a judge sorts out how much to pay each creditor.
Thus the five-day difference in payment could make a great deal of difference to the suppliers, since GM faces a June 1 deadline from the Treasury Department to win concessions from its bondholders and unions, and to make other structural changes.
If it can't win agreement from those groups, the company may file bankruptcy on June 1, an option that CEO Fritz Henderson said is "probable" given the difficulty in getting agreements from the various groups, particularly its bondholders.

GM early payments: Another bankruptcy signal - May. 14, 2009

[vztrt]

GM are closing 1100 dealers in the US. Trying to avoid Ch11.

GM culls 1,100 dealers across US
By Washington correspondent Kim Landers and wires


The troubled US car giant General Motors says it will cut nearly 40 per cent of its dealers as part of its reorganisation plans as it struggles to avoid bankruptcy.

General Motors has almost 6,000 dealers across the United States.

It has started notifying 1,100 of what it calls "underperforming and small sales" dealers that their franchises will be terminated late next year.

GM plans to scrap almost 2,300 dealers.

The announcement comes one day after Chrysler asked a bankruptcy court judge to shut down almost 800 of its dealers.

General Motors has until June 1 to complete a major restructuring plan or be forced into bankruptcy too.

GM vice president Mark LaNeve said many of the dealers notified this week were selling 35 or fewer vehicles per year.

Additionally, GM said it would also likely sever ties with about 470 Saturn, Hummer and Saab dealers as it sheds those brands.

"We have said from the beginning that our dealers are not a problem but an asset for General Motors," said Mr LaNeve.

"However it is imperative that a healthy, viable GM have a healthy, viable dealer body that can not only survive but prosper during cyclical downturns. It is obvious that almost all parts of GM, including the dealer body, must get smaller and more efficient."

Mr LaNeve told a conference call that although GM does not incur direct costs from the dealers, the sales outlets must be able to invest in the brand to keep GM viable.

If dealers only sell a small number of cars, "over time they can't afford to invest in their business to the degree their competition can," Mr LaNeve said.

The reduction of the dealer network is one step in the deep restructuring GM is trying to undertake.

Mr LaNeve says it still must win additional concessions from bondholders and its main labor union to implement the plan.

- ABC/AFP

[Dave Q]

It doesnt surprise me that the General is in trouble.

Apart from the measures above, the fact is that they have to produce a whole new model range with much better efficencies, more luxury and much smaller engines.

The Vectra was a more suitable size for a lot of people, but it was too expensive and couldnt compete with its competition.

Like the Camry for example. The same car in a six or four cylinder version. Why couldnt the General modify the Commodore, make it lighter, sharper with a few mods and smaller engine? It sells OK now, but what happens when the new body shape starts to date and petrol hits those nasty highs again?

People arent having as many kids now as they used to, most of drive alone or with one other. For extra storage the car manufacturers should be thinking of going up, not so much making cars longer or wider....

Ive just got my first holden for many years. Its a smooth drive. However,simple things like changing an interior light globes, number plate globes etc are much more difficult than in Subaru's and Toyotas.

Why is it so hard to replace console and dashboard lights? Why cant the design be improved to make this easier so as to help people customise their interiors? Look at iGoogle, that lets you customise your own internet home page. Thousands of people are joining up.

These days a lot of people want to individualise their car, or upgrade components, the General hasnt made that process exactly cheap or easy. The stories of people having trouble with Holden spare parts and servicing abound this site. It doesnt have to be that way. Holden should be putting a rocket up its dealers about being responsive and friendly. It should introduce real rewards and discounts for long standing customers.

Ive known dealers to offer rubbish on trade-ins on their own vechiles, bought a few years ago. Not just rubbish deal but a very arrogant attitude. That sale was lost and that customer was lost forever to that dealer.

Soon all the petrol stations in NSW will be required to sell E10. Why isnt the General making its car more E10 freindly? Where is the special gizmo that will lift performance on E10? I hope thats under development.

The Commodore is a great car and its been the leader in its class for ages, the new shape is edgy and quite attractive. But the interior of the Omega is very bland. It offers very little to excite or be proud of. I suppose as the base model, thats the idea. Theres some good ideas such as the handbrake that flattens into the console. Thats clever and worthwhile. But with the same amount of money, dabbling in second hand euros or japs, I could buy a lot more luxury and ecomony for the same dollars.

I hope that Holden survives GM being wound up and the importance of a local car industry in a country with such great distances and urban designs based on roads, needs to be embraced and supported...even subsidized.

But times are tough and the General needs to get going.

[Reaper]

GM bondholders shun tender offer; bankruptcy nears

DETROIT/NEW YORK (Reuters) – General Motors Corp has failed to persuade enough bondholders to accept a debt-for-equity swap, setting the stage for the largest-ever U.S. industrial bankruptcy within days.

The event marks a critical disappointment for GM, the largest U.S. automaker and once considered the bellwether of U.S. manufacturing. A popular ad for the automaker once stated that "What's good for General Motors, is good for the USA."

"I would say this is a sound rejection of an unsuitable offer," said Pete Hastings, a credit analyst at Morgan Keegan who has followed GM. "I have been saying for some time that this thing was dead on arrival and we were just waiting for the doctor to pronounce it dead. Now that's happened."

The largest U.S. automaker had so far failed to gain anywhere near the 90 percent of bondholder support desired to stave off bankruptcy, two sources familiar with the discussions told Reuters on Tuesday. Bondholders have until midnight to make their final decision on the tender.

As of midday Tuesday, the source said the company had only a "low-single-digit" percentage interest from bondholders.

But bondholders have balked at proposals that they forgive debt in exchange for a 10 percent stake in a restructured company.

GM had no comment on the bond exchange. The automaker said it would detail results of the exchange on Wednesday morning. Reuters sources said GM could file for bankruptcy some time after midnight Tuesday, but before June 1.

THE WAITING GAME

While the failure to reach a bondholder deal is a severe blow, GM did reach an agreement on Tuesday with the leadership of the United Auto Workers (UAW) union.

The key for GM's negotiations with the UAW has been how the two sides restructured payment terms on $20 billion that the automaker still owes to a trust fund for retiree health care (the Voluntary Employee Beneficiary Association, or VEBA).

The UAW agreed to take 17.5 percent of common stock in a restructured GM, a person familiar with the terms told Reuters.

The union would also be paid $6.5 billion in preferred stock and would be granted a $2.5 billion note.

A deal on those terms would mean that the union was successful in taking on less risk than it would have under an earlier proposal from GM that would have given it 39 percent of the automaker's common stock.

As part of the plan, GM will offer buyouts to all UAW employees. Workers with 20 years or more will be offered $115,000 and a $25,000 voucher toward purchase of a new GM vehicle.

The UAW rank-and-file will vote on the contract on Wednesday and Thursday. Union officials who met in Detroit on Tuesday unanimously endorsed the pact after a briefing with UAW President Ron Gettelfinger, a person at the meeting said.

Current shareholders would be left with just 1 percent of a restructured company.

GM bondholders shun tender offer; bankruptcy nears - Yahoo! News

I don't get it. Accept the deal and you get 10% of what will essentially be a profitable company. Don't and you will end up with around 1%. I don't understand the logic Surely they understand by now it's not about getting their cash back. The game is to mitigate any loss by any (legal) means possible. Heck - eventually they may actually come out in front, although I wouldn't be betting the house on that happening any time soon.

Reaper

[greenfoam]

The US government said they will keeping pumping money into GM to keep it running no matter what so there doesn't seem to be anything to loose. The Government will own the majority of GM anytime soon, will be exciting to see what kind of cars Obama likes to build. He will be like Homer except electric

[GetToDaChopa]

Just heard in the news that its certain. When the company emerges from bankruptcy, it will be much smaller.

[Full Spectrum]

Hopefully after bankruptcy they can actually run it lol. GM needs to cut more in NA and stop talking about it.
Stop looking outside the box.

[Wombat]

All the auto makers over there shot themselves in the foot in the nineties with those useless great gas guzzling SUV's...they thought it was what the market wanted and needed, so they tooled up to build Dodge Rams, Ford F250's, and Chev Suburbans by the truckload, and then oil prices went up, and no one wanted them, thus more money down the toilet retooling the plants to make smaller more fuel efficient cars, and acres of unsold trucks...

The US industry needs a good shake up...as does a lot of places. Look at the standard equipment levels of cars from Japanese and Korean makers...and those cars can't be called cheap and nasty buzzboxes anymore.

[Dave Q]

All the auto makers over there shot themselves in the foot in the nineties with those useless great gas guzzling SUV's...they thought it was what the market wanted and needed, so they tooled up to build Dodge Rams, Ford F250's, and Chev Suburbans by the truckload, and then oil prices went up, and no one wanted them, thus more money down the toilet retooling the plants to make smaller more fuel efficient cars, and acres of unsold trucks...

The US industry needs a good shake up...as does a lot of places. Look at the standard equipment levels of cars from Japanese and Korean makers...and those cars can't be called cheap and nasty buzzboxes anymore.

The japs are still in front of the Koreans for mine.

But we should be out in front of both of them by virtue of our world class designers and innovators.

For example, why couldnt we implant solar panels on the roof of cars to recharge batteries and run electrical systems?

Why are the doors of a Lumina so heavy compared with the Aurion?

Why is servicing so expensive?

Why dont we have a fan that will automatically sense and then expell hot air from the car on an intermittant basis when it is parked in the sun?

Why arent we building cabin air filters like they are in the USA?

Can we build a car that we can add to when we need more passenger and luggage space?

[Reaper]

Obama team confident of returning GM to profitability | The Australian

GENERAL Motors will file for Chapter 11 bankruptcy early today in the US, marking the humbling of an American icon that once dominated the global car industry and setting up a high-stakes gamble for US taxpayers.

The question now facing 56,000 auto workers, 3600 GM dealers and the Obama administration is this: Will it work?

The Government, which will own a majority of the company, is wagering upwards of $US30 billion ($37.4 billion) that it can return GM to profitability, reversing a decades-long decline by shearing away liabilities and creating a freshly competitive car-maker by the end of the northern summer.

The reorganisation faces myriad risks, ranging from legal challenges to the uncertainty of when consumer demand for new cars will rebound. In becoming GM's new owner, the Government is also entering largely unexplored terrain filled with political minefields, notably the possibility of meddling by Congress in the company's daily operations and business plans.


Obama team confident of returning GM to profitability

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UPDATE: Kevin Helliker | June 01, 2009
Article from: The Wall Street Journal

GENERAL Motors will file for Chapter 11 bankruptcy early today in the US, marking the humbling of an American icon that once dominated the global car industry and setting up a high-stakes gamble for US taxpayers.
General Motors headquarters, Detroit

Unknowns: The reorganisation at GM faces myriad risks, including legal challenges and the uncertainty of when consumer demand for new cars will rebound. Picture: Bloomberg

The question now facing 56,000 auto workers, 3600 GM dealers and the Obama administration is this: Will it work?

The Government, which will own a majority of the company, is wagering upwards of $US30 billion ($37.4 billion) that it can return GM to profitability, reversing a decades-long decline by shearing away liabilities and creating a freshly competitive car-maker by the end of the northern summer.

The reorganisation faces myriad risks, ranging from legal challenges to the uncertainty of when consumer demand for new cars will rebound. In becoming GM's new owner, the Government is also entering largely unexplored terrain filled with political minefields, notably the possibility of meddling by Congress in the company's daily operations and business plans.

Even if a new GM emerges swiftly from bankruptcy, the administration will face a thicket of challenges, including closing more than a dozen factories and shedding the Pontiac, Saturn, Saab and Hummer brands. Shepherding these unwanted parts of GM - the so called Old GM - through liquidation in court could take years, with potential extra costs to taxpayers if the process bogs down.

[Raptorsc]

By tomorrow morning it will all be official, GM in for bankruptcy reorganisation

[Astranomical]

Whoa.

I wonder what this means for Holden?

[Reaper]

Nothing for the immediate term. They haven't been building G8's for months and the export Lumias etc have been severely curtailed since late last year. Longer term depends on how GM emerges from it's bankruptcy.

At worst Holden will be either speaking Chinese or Indian in a year or so. More than likely I suspect it will stick with it's American.

Reaper

[VYFORI]

Tough love

Rik

[Langas]

And GM's bankrupt...

General Motors files for bankruptcy | News.com.au Top stories | News.com.au

[VY03]

Holden will weather GM storm, says Carr | The Australian

"Quote"

THE Rudd Government is optimistic car manufacturer Holden will be "safe", even as its US parent, General Motors, faces the prospect of bankruptcy.

[vzlumina]

This just in . . . as at June 1st 10:30PM

"GENERAL Motors has file for bankruptcy tonight, forcing the 100-year-old car maker once seen as a symbol of American economic might and dynamism into a new and uncertain era of government ownership"

Source: General Motors files for bankruptcy | Business | News.com.au

"General Motors filed for Chapter 11 bankruptcy protection on June 1, 2009, with a plan to re-emerge as a smaller and less debt-burdened organization in a couple of months.[10] The chapter 11 petition was filed in the federal court in Manhattan, New York. The filing reported US$82.29 billion in assets and US$172.81 billion in debt.[11] As ranked by total assets, the bankruptcy is the fourth-largest bankruptcy in U.S. history"

Source: General Motors - Wikipedia, the free encyclopedia

[Reaper]

Holden Operations Unchanged by Parent Company Announcements in the US

· Holden to be part of New GM;

· Holden not included in US filing under chapter 11;

· No direct impact on local design, engineering and manufacturing operations;

· Technology improvements to best-selling Commodore, introduction of second carline remain on track;

· No changes to Holden employees and supplier payment arrangements; and

· No changes to Holden dealer and warranty arrangements.

Holden will continue normal operations in Australia and New Zealand and does not expect changes to its business after General Motors announced it has taken court action in the US to launch a competitive New GM.

“Operations at Holden are unchanged in Australia and New Zealand and we expect it to remain that way,” Holden Chairman and Managing Director, Mark Reuss, said today.

“GM has clearly stated that all of its businesses in the Asia Pacific region – and that includes Holden – continue normal operations and are not directly impacted by this process in the US.

“No operations outside the US are included in the court filing or court supervised process.

“Holden is a subsidiary of GM but we are a corporate entity in our own right – an independent company under Australian law.


“Beyond that, GM has indicated that Holden will be an important part of the New GM.

“We intend to maintain our focus on Holden product programs and activities.

“That means technology improvements to our best selling Commodore range, launching the all-new Holden Cruze this month, and the introduction of our locally-built fuel efficient, four cylinder small car next year.

“We continue to run full operations at Elizabeth and Port Melbourne, producing cars for our 300-strong independent dealer network.

“We don’t anticipate this decision will have any direct impact on Holden’s workforce, dealers, or suppliers.

“Holden customer warranties are not affected and we continue to deliver the sales and service experience that our customers expect.

“We wouldn’t normally issue statements to highlight nothing has changed, but we appreciate that customers will naturally ask questions about this sort of announcement from the US.”

Mr Reuss said Holden would remain informed of developments in the US, a process which had been determined to reinvent General Motors.

“The process being used in the US is unlike Australian and New Zealand law. It is a fast, court supervised process that permits the sale of selected assets to a new entity,” Mr Reuss said.

“Unlike court-controlled processes in many other countries, US chapter 11 allows GM to deal with the financial issues that have built up over many years and for New GM to emerge as a healthier business, better able to deal with the challenges of today and tomorrow.

“It does not mean ceasing to trade.”

Pending approvals, the New GM is expected to launch in about 60 to 90 days as a separate and independent company from the current GM, with two distinct advantages: it will be built from only GM’s best brands and operations, and it will be supported by a stronger balance sheet due to a significantly lower debt burden and operating cost structure than before.

GM has previously indicated it is negotiating with prospective buyers for the Saab and Hummer brands. GM is working closely with dealers, including those in Australia and New Zealand, to continue delivering vehicles and maintaining aftersales and servicing requirements.

GM Group Vice President and President of GM Asia Pacific, Nick Reilly, said: “We believe this step – which was taken with the support of the US Government – is the most efficient and effective means for New GM to emerge with substantially less debt and lower operating costs, and with our operations positioned for long-term success.”

Holden customers with queries about this announcement can contact the Holden Customer Assistance Centre on 1800 033 349.

KEY FACTS - Holden

· Holden employees more than 6000 people in Australia and New Zealand.

· Holden spends $500 million annually on employee wages.

· Last financial year Holden spent $420 million on research and development – more than any other private company in Australia.

· The Holden Commodore has been Australia’s best-selling car since 1996.

· Holden has produced more than 7 million vehicles since 1948.

KEY FACTS - GM

What GM Corporation’s US filing is:

· An accelerated, court-supervised sale of GM’s strongest operations and brands to New GM, which is intended to be completed within about 60-90 days.

· The most efficient and effective means to achieve the substantially lower debt and operating costs necessary to align the operation for future success.

· Unlike court-controlled processes in many other countries, the US process being used by GM will allow it to continue trading and enable New GM to emerge as a leaner company with a stronger balance sheet.


What this US filing of GM Corporation is not:

· This is not liquidation or a discontinuation of operations by General Motors.

· This is not a proceeding similar to insolvency proceedings in Australia.

· This does not mean New GM is going out of business or intends to pull out of Asia Pacific or any other region.

GM Media Online

[Astranomical]

And here's the FAQ:

Frequently Asked Questions - Holden

How is Holden affected by this filing?
Holden is not directly included in or impacted by the US court proceedings.

Does this mean Holden is going out of business?
No. None of GM’s operations outside of the US are included in the US court filings or court-supervised process, and these filings have no direct impact on GM’s plans and operations outside the US.

But doesn’t bankruptcy mean the end of a company?
Chapter 11 in the US is not like Australian law. It is a highly structured, court-controlled process that allows companies to continue trading while they reinvent their operations. Unlike the systems of many other countries, the US chapter 11 process is focussed on the preservation and reinvention of a company’s business. It does not mean ceasing to trade.

What happens to Holden once New GM emerges from chapter 11?
Holden will be an important part of the New GM.We will maintain our focus on product programs and activities.That means technology improvements to our best-selling Commodore range, launching the all-new Holden Cruze and the introduction of our locally-built fuel efficient, four-cylinder small car next year.

What happens to Holden’s operations during GM’s chapter 11 process?
Holden continues to run full operations at Elizabeth and Port Melbourne, producing cars for our 300-strong independent dealer network. We don’t anticipate this US action will have any direct impact on our local workforce, dealers or Holden suppliers.

Will there be any impact on your workforce?
We don’t anticipate this decision will have any direct impact on our workforce, dealers or Holden’s suppliers. Employee pay and benefits will continue. Any decisions related to Holden’s staff would be made by Holden, not as the result of any overseas action.

Are your dealers affected?
Holden dealers, warranty and customer support operations are unaffected by the US filing.

Will financial institutions continue to provide credit to Holden dealers to finance sales in Australia and New Zealand?
We do not foresee any interruption with regards to dealer or retail financing.

What happens to Holden customer warranties?
Holden warranties are not affected by this announcement.

Does GM’s announcement put a stop to any Holden projects?
No. We continue our development work on fuel-saving technologies and future models. Work has already commenced preparing our Elizabeth plant to build our all-new, fuel-efficient, four-cylinder small car.The project remains on track with production to commence in the third quarter of 2010. Our funding and capital for that project is locked in. We have also just launched the new Cruze and continue developing future models of Australia’s top-selling car, the Commodore.

Will Holden’s suppliers get paid as a result of this decision?
Holden supplier payments remain unchanged.

If Holden is not directly impacted by this decision, why are you issuing statements about it?
We wouldn’t normally issue statements to highlight that nothing has changed, but we appreciate that customers will naturally ask questions about this sort of action in the US.

Do Holden operations have access to its technology patents even though GM had filed for chapter 11?
Despite the filing, GM Asia Pacific – and that includes Holden - will have continued access not only to the intellectual property developed in AP, but also to the intellectual property developed elsewhere in the new global GM organisation.

What will happen to Holden’s management team? Will it remain in place?
We do not foresee any changes to Holden’s management.


Frequently Asked Questions – General Motors

What is chapter 11?
Chapter 11 refers to the provisions of chapter 11 of the US Bankruptcy Code that allow a company to pursue a court-supervised process to address its financial challenges while continuing to trade. Unlike the laws in many other countries, the chapter 11 process is focused on the preservation and reinvention of businesses.

What is a 363 filing?
GM is using section 363 to transfer assets to New GM and enable it to quickly emerge from chapter 11 as a leaner, stronger company. It is a commonly used and proven provision of the US Bankruptcy Code.

What does GM hope to accomplish via the 363 sale?
‘363’ is a proven process that will allow New GM to emerge a leaner business with a significantly stronger balance sheet, a world-class product lineup, a global footprint and industry leading expertise and technology. Many major US companies have successfully used the 363 process.

Why did GM file for chapter 11?
In the US GM reached important agreements with key stakeholders that will significantly reduce its debt and strengthen its capital structure, and help accelerate its reinvention. To implement these vital agreements, GM is using an expedited court supervised process under chapter 11.

With the support of the US Government, the UAW, other key stakeholders and with safeguards for customers and suppliers, the section 363 process will enable GM to accelerate the sale of its strongest brands and operations to the New GM which will emerge a lean, profitable, self-sustaining company.

Does this mean GM is going out of business?
No. GM is reinventing its business, not going out of business. Its operations will continue as normal during the chapter 11 process, which should take about 60-90 days.

Does this filing impact GM’s operations/subsidiaries outside of the US?
GM’s subsidiaries outside the US are not included in the filing. There are no legal changes to the way GM conducts business in Asia Pacific, including Holden, as GM’s operating entities in AP are not US based companies.

Why did GM choose the 363 process over a pre-packaged chapter 11?
The US Government and GM believe the tools made available through the 363 process will enable GM to accelerate its rebuilding process. ‘363’ is a process that will allow New GM to emerge as a leaner company with a significantly stronger balance sheet, a world-class product lineup, a global footprint and industry leading expertise and technology.

Section 363 allows a company to sell assets quickly in an orderly fashion, and GM will be seeking the Court's approval to complete the sale so as to ensure that New GM has a stronger balance sheet.

The assets sold do not remain part of the original company and are no longer included in the chapter 11 filing. Many major US companies have successfully restructured using the 363 process, including:



– Continental Airlines

– Delta Air Lines

– Federated Department Stores (parent of Bloomingdale’s and Macy’s)

– Kmart

– Toys R’ Us

Looks like we can breathe a little easier for now, anyway...

[davey g-force]

Great news!

- Full operations will continue at the Elizabeth and Port Melbourne plants.
- Bankruptcy protection filings in the US would have "no impact" on GM-Holden's operations.
- The New GM is expected to emerge from bankruptcy protection within 60 to 90 days.

GM bankruptcy no threat to Holden | carsguide.com.au

[VYFORI]

Yeah hopefully American government doesnt stuff it up thou !!!!