By on April 2, 2009

Now that President Obama’s played a short clip of “Dr. Strangelove; or How I Learned to Stop Worrying and Love a GM Chapter 11” at his auto-related press conference, GM’s remaining stockholders have cottoned on to the inevitability of a GM Chapter 11. As TTAC’s Ken Elias predicted many moons ago, it’s only a question of time before the New York Stock Exchange de-lists GM. When Wagoner resigned and Obama opined, the zombie automaker’s share price began its final glide path. The stock plunged 25 percent on Monday and 28 percent on Tuesday. Yesterday, the price hit $1.58—before rebounding to $1.93, off 1 cent for the session. No surprise there. When the feds pull the plug, the stock will be worth precisely $0. The LA Times reveals the reason GM’s stocks are still publicly traded, by anyone. “Long-time GM shareholders may well figure there’s no point in selling now. If the stock becomes worthless, they can write it off for tax purposes at that point. Until then, it’s just a lottery ticket with extremely low odds of a payoff.”

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34 Comments on “57 Days to GM Bankruptcy: Stock Set for Delisting...”


  • avatar
    hazard

    I’d like to point out the following article:
    http://news.yahoo.com/s/nm/20090401/ts_nm/us_autos_report_sb

    and it says,

    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.

    If this happens, it’s even more insidious than I thought. GM will cease to exist. The government will control the bankruptcy so they can pick and choose which assets they want – first. Federal Motors here we come.

    Btw – this is what should have been done with the banks, not with an automaker. Could someone please put the PTFOA in Geithner’s place?

  • avatar
    Stein X Leikanger

    What a journey for GM — books are being written as we surf.

  • avatar
    Rod Panhard

    There’s no rush to de-list. A former employer of mine was well-below the $2 per share threshold for three months before they were given 30 days notice. And on the 32nd day, they were delisted.

  • avatar

    seems they would rather file than try Return to Greatness.

  • avatar
    200k-min

    That photo is a prefect image of Detroit. Abandoned and boarded up buildings on deserted streets with a glass tower in the distance, safely separated from the reality of the world below.

  • avatar
    jolo

    Buickman thinks that:

    seems they would rather file than try Return to Greatness.

    They were never really that great. Return to average? Maybe. That would be a goal they might get to. Overall, they were lucky they were just average.

  • avatar
    johnny ro

    The reason it trades and the reason its still listed is two different things.

    If it swings up and down 25-50% a day, then you can really have fun gambling and make a killing on it if you are lucky, in a day or two.

    Why its still listed? it wont be for long. It takes a long time for such a large entity to die, and delisting is only one more spasm, one of the last ones maybe.

  • avatar
    fallout11

    200k-min, director Paul Verhoeven (Robocop) thought the same thing back in 1986. Not much has changed in the intervening 23 years.

  • avatar
    tigeraid

    Damned if that picture doesn’t sum GM up nicely–decadence surrounded by decay.

  • avatar
    Pch101

    There’s no hurry to delist it. Companies that file bankruptcy are traded on the exchange until the day that they file. At that point, the stock would be removed, and would become effectively worthless.

    this is what should have been done with the banks, not with an automaker.

    That is exactly what happens with banks that fail. The difference here is that the feds would be taking the company for an interim period until they can dump it. If it worked with Conrail, why can’t it work here?

  • avatar
    bluecon

    Were going to have the new UAW Obama Motor company. Free lube jobs for all taxpayers, just bend over.

  • avatar
    Nicodemus

    @ Tiger aid, “Damned if that picture doesn’t sum GM up nicely–decadence surrounded by decay.”

    Not meaning to be a smartarse, but I think ‘opulence’ might have been a better choice of word since decadence and decay mean the same thing.

  • avatar
    bluecon

    The GM stock is a good gamble. The President says that they won’t be bankrupted for some 57 more days. So you can play the stock and buy on the low and sell on the high for the next 57 days and not lose everything to bankruptcy. Still risky but if you want to spend the day tracking the stock you might make some money.

  • avatar
    sutski

    bluecon

    hahahhaa, too funny. That reminds me, I was at a standup comedy show last night and for something to think about during the break, they asked the audience to come up with answers to “What is the difference between the G-20 and ABBA….best audience reply, “not everyone has been f***** by ABBA” haha

  • avatar
    GS650G

    Up 14% today, no doubt day traders are having a field day with this stock. No institution would go near this turkey.

  • avatar
    Kevin

    GM is still listed? Since when is federal government property listed on the stock exchange? Since when are minor federal agencies listed on the NYSE? What next, is the U.S. Fish & Wildlife Service listed on NASDAQ?

  • avatar
    no_slushbox

    Taking it off the Dow 30 would be a really good start.

    I recommend that Dow Jones replace it with Toyota, the amount of stock that index funds would have to buy in Toyota might make Toyota a US company.

  • avatar
    Pch101

    I recommend that Dow Jones replace it with Toyota

    It would be a first to include an ADR as a Dow component.

    GM should have been removed from the Dow some time ago, and replaced by something else. The auto industry doesn’t need to be included at all. If the idea is to choose 30 large companies that represent US industry as a whole, then there isn’t much need to include any auto company of any kind.

  • avatar
    no_slushbox

    Pch101:

    Yeah, while they will have to get rid of GM sometime soon I highly doubt TM will replace it.

    Although I don’t see any reason TM couldn’t, unless there would be something prohibiting the depository bank from dramatically increasing the number of shares it holds and floats as ADRs.

    Toyota faces a number of future challenges, so it might not be a good investment, but the idea that it could possibly become American if enough investors wanted it to puts the Detroit automakers flag waiving in perspective.

  • avatar
    Pch101

    Toyota faces a number of future challenges, so it might not be a good investment

    I personally like the stock (although it seems a bit rich at today’s price of $72; I liked it when it was below $60.) They stand to gain quite a lot from Carmeggedon.

    Not to turn this into Blogging Stocks, but TM should do quite nicely when the economy recovers, and is probably the safest play of all of the auto stocks, in my opinion. (Ford may have more upside in percentage terms, but it’s a lot riskier and there is a possibility of it tanking completely.) Don’t be surprised if Toyota goes past $100/share when the recovery is underway, which it will be soon enough, despite the doom and gloom mood that we are seeing today.

  • avatar
    wjptam

    I don’t think decadence means the exact same thing as the physical decay in the photo.

    Decadence is a decay of intellect, morality, willpower and work ethic, ironically housed at something called the Renaissance Center.

    The photo looks like it could be a location shot for the remake of the movie RoboCop. Remember the vision of Detroit in that movie? It’s really not too far off from the current reality.

  • avatar
    John Horner

    “GM should have been removed from the Dow some time ago … ”

    While I agree, the full name of the index is the Dow Jones Industrial Average. It seems like there need to be some industrial companies in there. Or, maybe they will just change the name to DJIA and say oh, those are just four letters … they don’t mean anything.

  • avatar
    Pch101

    While I agree, the full name of the index is the Dow Jones Industrial Average. It seems like there need to be some industrial companies in there.

    The name is a bit archaic these days. Today, companies such as Walmart, AmEx and Microsoft are Dow components.

    Once upon a time, heavy manufacturing was a major component of the US economy. Today, we are more diversified and services oriented, and the Dow reflects those changes.

    The theory of the Dow is that it can serve as a measure of the performance of American business in general. The name is just a holdover, in order to create linkage with the traditional index and to avoid confusion with all of the other assorted indices that Dow Jones publishes.

  • avatar
    Luther

    Nice photo, RF…The background will look like the foreground in 5 years.
    Like 1990 Leipzig.

  • avatar
    bluecon

    GM is still listed? Since when is federal government property listed on the stock exchange?
    You ever hear of Fannie Mae and Freddie Mac?

    The government did such a good job in the housing market they are going to work their magic on the auto industry.

  • avatar
    folkdancer

    Donald Trump has a simple TV show where he gives out assignments and those who fail at their assignments get fired.

    We gave Rick W. an assignment and he failed to do it. (Actually he was failing assignments for many years.) So he got fired.

    You can now call GM Government Motors or Obama Motors or anything you want to but it was our money and we taxpayers had a right to take action.

  • avatar
    ZoomZoom

    That picture almost looks like Brush street, looking towards the RenCen. I used to work near there back in the 80’s.

    I drove a shit-brown Dodge station wagon with only an AM radio. I remember hearing the news on the radio when Reagan fired the striking air traffic controllers.

    One of the guys in our place of business got robbed at gunpoint. He had just been to the bank to cash his paycheck. The robber was very familiar, maybe because a week earlier the victim had been robbed at gunpoint..by the same guy. Yes, he had .. just.. been to the bank…

    Word has it the robber said to him, “I should have shot you the first time!”

    I’m glad I don’t work in that hellhole of a city anymore.

  • avatar
    jerry weber

    Hazard, says GM will cease to exist after a bankrupcy. Well da, the GM we used to know has ceased to exist a long time ago. the smoke and mirror shell being operated the last 10 years was not really GM anyway. When you have sold all of your assets still have more debt than you started with and your market share continues to dive, what usually would happen to any other unhealthy corporate entity in the World? If cadillac and chevy can be a new company (SM specific motors not general motors)and actually make a profit on all of their products, this might be the best that can be asked for in today’s situation. If all of the products in the new company are competitive and are redesigned on a regular basis, this to me would be success. Suppose “SM” took 20 % of the market, held that share and was respected by all again, is that so bad?

  • avatar
    Robert Schwartz

    “If it worked with Conrail, why can’t it work here?”

    Because Conrail had irreplaceable, immovable assets, in the form of its rights of way. GM has nothing like that.

    The soft spot in my heart for the cream and red ’55 Chevy Bel-Aire convertible that my father bought way back when will die when I do, sooner, rather than later. My children have no such memories.

  • avatar
    Pch101

    Because Conrail had irreplaceable, immovable assets, in the form of its rights of way.

    That isn’t a relevant difference. The predecessors to Conrail were losers that were not helped by that factor.

    The feds were able to do what the private sector would not — they turned it around, and flipped it for a profit. There are times when the feds are better capitalists than the private sector leaders who are allegedly better at it.

    A streamlined, profitable, successful GM (if such a thing is possible) could easily be a $80-100 billion company. With proper management, that makes the chance for recovery high if the current inept Board and upper management are removed from the equation, and steps are taken to create a coherent lineup of products that can be sold at a profit.

  • avatar
    Robert Schwartz

    Turn Conrail arounnd?

    Here is a brief history of Conrail heavily edited from Wikipedia:

    The Penn Central Railroad, formed in 1968 by the merger of the New York Central and Pennsylvania Railroads, declared bankruptcy in 1970.

    In 1973, the Judge in the Penn Central bankruptcy threatened to end all operations if it did not receive government aid.

    The Regional Rail Reorganization Act of 1973 provided interim funding to the bankrupt railroads and defined the Consolidated Rail Corporation, Conrail.

    Conrail began operations in 1976. During its first seven years, it was highly unprofitable, despite receiving billions of dollars of assistance from Congress.

    Although Conrail’s government-funded rebuilding of the heavily run-down infrastructure it inherited from its six bankrupt predecessors succeeded by the end of the 1970s in improving its physical condition, the fundamental economic regulatory issues remained, and Conrail continued to post losses of as much as $1 million a day.

    The Staggers Act of 1980 allowed railroads to set rates that would recover capital and operating cost, ended cross-subsidization of costs between routes, and allowed abandonment of fundamentally uneconomic routes.

    Conrail began turning a profit by 1981, the result of the Staggers Act freedoms and its own managerial improvements under Stanley Crane, who had been chief executive officer of the Southern Railway. The Northeast Rail Service Act of 1981 relieved Conrail of its requirement to provide commuter service in the Northeast and exempted it from state taxes, further improving its finances.

    After that, Conrail began to improve and reported taxable income between $2 million and $314 million each year from 1983 through 1986. In 1987, the Government sold Conrail in an IPO for $1.9 Billion. In the 1990’s, CSX and NFS, two eastern rail competitors of Conrail, engaged in a takeover battle to control the railroad and expand their systems. In 1997, they struck a compromise, and agreed to jointly acquire Conrail and split its assets.

  • avatar
    Dave

    Dumb question (I’m good at them), as I’m not resident in N America, assuming GM survives bankruptcy, does it actually have any product that customers want without serious discounting?

    If all that emerges is a so-so product range, but cheaper, that could affect the other OEMs – both Ford and the transplants – so what happens to their jobs that Obama presumably wants to save?

  • avatar
    Dynamic88

    Don’t be surprised if Toyota goes past $100/share when the recovery is underway, which it will be soon enough, despite the doom and gloom mood that we are seeing today.

    What do you mean by “soon enough”? Are you just saying it will eventually recover, or are you saying it won’t be long?

    I ask because I’m thinking the recovery will be slow. Gradual. My reasoning has to do with credit. I don’t see the “free and easy” credit coming back soon, and I think just possibly this recession has scared people enough that they may take a more responsible attitude towards borrowing. If I’m right, our debt based economy will be slow in recovering.

  • avatar
    Pch101

    Turn Conrail around?

    There is no doubt the federal government turned Conrail around, after the private sector failed to do so. It took several bankrupt companies, reorganized them and sold them back into private industry. In the process, the government basically broke even and avoided the consequences of what would have occurred had they not previously intervened.

    I ask because I’m thinking the recovery will be slow. Gradual. My reasoning has to do with credit.

    Do remember that stock prices tend to be a leading indicator. They will rebound in anticipation of future events, so stocks will rise before the recovery is complete. Factors such as unemployment are lagging indicators; the recovery will be well underway as unemployment tops out.

    Also keep in mind that Toyota is a global company. It will get a lift from recoveries in emerging markets in ways that a company such as Ford would not.

    And finally, the US government is working overtime to push credit into the markets. Credit has already started to loosen in certain sectors, and I believe that you’ll see a broad recovery of credit within the next couple of quarters.

    Many of the 90% of us who are still employed at that point will step back, breath a sigh of relief that their heads haven’t hit the chopping block, and start spending, which will reignite the growth cycle. Americans like to spend money, so it won’t take much to encourage them.

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