SO, should we waste our tax dollars (at a time when we can least afford it thanks to “W” and their camp) to bail out a company that deserves to crash? Let them file, shrink and if they remain uncompetitive they die. Simple as that.

href=”http://biz.yahoo.com/usnews/080822/22_how_bankruptcy_would_wreck_gm_and_chrysler.html”>

I do agree with you there. Chapter 11 is often used as a way to liquidate a company without going through Chapter 7. The company doesn’t survive in such a case, but it isn’t expected to. It is simply a way to sell off the assets (via section 363 sales) in a more efficient way than is available in a Chapter 7. Whether this is good or bad is a debatable point, but it certainly isn’t what was contemplated.

Regards,
TED

The stockholders are the owners of the company. It is certainly fair that they should have to pay their debts before taking back equity from liquidation. That’s chapter 7.

Chapter 11 is where the workers and management get a judge to screw the equity holders in their favor. Reorganizing the company so that it can take the property bought with the stockholders’ capital, and then putting it up for sale to new stockholders while often simply giving the existing management a lot of the stock. That’s theft or chapter 11.

What chapter 11 was supposed to be, and what it has become, are two seperate things altogether. It hurts everyone, and only then helps a few people who otherwise would have to look for a job. In the end, I believe it simply reduces the number of jobs available in any given industry.

Why are they unfair? You are either in the money or you are not. If you are, you get something, if you aren’t, you don’t. That is true of all classes of creditors. Equity happens to be at the bottom of the heirarchy, but you knew that going in as an equity investor…

FWIW, I don’t see GM going in as a Chapter 7. It is more likely to go in with a liquidating 11 plan which would bring a greater return to the creditors since it would be a controlled liquidation of going concerns instead of a fire sale…

TED

SAIC-GM is 50% owned by both, being a JV, but GMDaewoo is part-owned by GMHolden (wholly owned by GM), and part-owned by SAIC of China (as well as having a tiny percentage owned by Suzuki).

If the Chinese manage to snag GM, it’ll probably be via the route they already have open to them, as a guess.

Part-ownership of some of GM’s operations already.

True, very true, but that does in itself not mean everything. This is not a static world and renders itself moot if GM can figure out a way to make cars profitable again, soon. (Given, that that doesnt appear to be happening)

At $10/share, GM’s stock price yields a total market value of less than $6b for a $160B revenue company.

Revenue is independent of value. Try projected profits versus market cap.

The credit agencies all mark the corporate credit of the company just a few notches above default, and that’s a gift.

Is it? It is probably pricing in a government bailout, a possible recovery, or some other miracle. They are priced.

The company’s financial statements chart the changes; GM’s just a breath away from insolvency. As of June 30th, GM’s working capital stands at a deficit of $20b. Total shareholder equity is a staggering $56b in the hole. GM’s net liquidity (cash less debt) remains underwater at $15b. How can GM escape?

I disagree again. The only way this is a problem is if there is a “run on the bank” so to speak. All GM has to do is meet its operations and debt service obligations, which in the short term it can do with cash on hand.

It can’t. There is no light at the end of the tunnel. There’s no amount of restructuring that can save this company.

This is a statement of opinion on their strategy, not on there actual cash position. Yes things look very bleak but the case is not cut and dried in these numbers.

GM will do what automotive suppliers before it-– Delphi, Tower, Dana– have done. File bankruptcy for its North American operations. End the misery, pare the company’s balance sheet, shed brands, complete the transformation.

They probably will do this but, again, but if it were certain, GM stock would be worth even less.

Didnt you guys claim with certainty that Chrysler would file for Bankruptcy by August 3rd?

Well…..Its August 21st. Why is that point relevant to this discussion? Because it shows that in spite of your inclusion of “facts”, it is still only speculation on your part. I wont hold my breath for a GM bankruptcy after the employee pricing sales subside. Particularly with gas prices subsiding. Hope will spring eternal at GM.

http://www.dailyreckoning.com/index.html

Actually I found the Independence Journal to be fascinating. Especially the part about the silver & gold, since I’m a bit of a gold bug. Interestingly enough, similar sentiment is creeping in the other gold bug sites as well.

So, to recap, since we’re entering the perfect storm, the powers-that-be have sh!t falling at top speed from the air recirculation device, several tons of the stuff is lining up behind other air recirculation devices, and the rich elite want to get the heck out and stay wealthy, in power and elite – and (literally) to hell with the rest of us – they seem to be trying the same massive trickery they pulled on Wall Street, with silver & gold.

“Prices” going down while demand is way up and supply is way down? But “prices” reflect “paper promises of silver & gold” not physical metal? While the elites buy up physical gold at manipulated low prices with soon to be worthless dollars?

How long have I been saying to my friends here at TTAC that you need to buy a bit of silver or gold, put a safe in your house and hold it?

We’ll see within a couple of years (or months, weeks, days or hours), won’t we?

Or, doesn’t anyone really think that GM going tits up is going to simply knock one of the final chocks out from under this economy, already teetering?

Please tell me that photo is some kind of computer trickery. Pardon my language, but if I was on that ship, I’d be petrified.

I was on a US Navy guided missile frigate that the entire bow went so far under water in a typhoon the waves went over the bridge windows.

Terrifying indeed!!!!!!!!!!

http://www.independencejournal.com/today.htm

Maybe I’m grasping at straws here but you go on to say “the perfect storm may have passed by then”

I’m confused are we looking at 6 weeks,6 months,2 years?Your opening statement is pretty bold,and you make a great case Would you be bold enough to give us a timeline?

I saw an Aveo hatch at the stoplight tonight and thought “I’d buy one of those in a millisecond if it was electric.” As it stands, it’s just another four banger, nothing special and not worth my cash. I’ve already got a gas burner.

http://upload.wikimedia.org/wikipedia/commons/thumb/c/c1/Chevrolet_Aveo_MY08_Rear-view.JPG/800px-Chevrolet_Aveo_MY08_Rear-view.JPG

And what was the logic behind that massive real estate grab they did? What are they going to do with all that property when they go under?

I think Chrysler is just Cerberus’s new play toy.

Ford is Mohamed Mullalys pet project and hobby. It will be a boost to his ego if he turns that company around and increase his net worth and self worth.

That home depot guy is likely just a tool for Cerberus. A middle man, blame guy, and fall guy.

Cerberus will profit off their purchase and investment one way or another.

By way of comparison, if the banks had not played it fast and loose with credit over the last 7 years, we wouldn’t be staring down anywhere near the mortgage and credit disaster we have now. We would’ve seen slower growth, but it would have been a smarter strategy.

Same thing with GM. Had they planned a bigger portfolio of competitive products, they wouldn’t be in the mess they’re in. The plan to bail out a failed company is an exercise in futility. It’s just delaying the inevitable. Seriously, what possible plan, what product mix would signal to the Feds and most importantly to consumers that GM makes what people want?

GM going tits up will have a terrible effect on the economy. The only thing worse would be putting it on financial life support and sending even more good money chasing after bad.