GM to File for C11 on Monday (June 1)

Robert Farago
by Robert Farago

Bloomberg reports that GM’s scheduled its Chapter 11 filing for Monday, June 1, 2009. And we were wrong about GM’s bankruptcy becoming the world’s largest. Thanks to Ex-CEO’s Rick Wagoner’s decision to throw all of GM’s “non core” assets into the fiery pit of the company’s endless cash burn, the American automaker’s C11 will only rank as number three. “GM’s bankruptcy will be the third-biggest in U.S. history after Lehman Brothers Holdings Inc. and WorldCom Inc., based on GM’s reported global assets of $91 billion and total liabilities of $176.4 billion as of Dec. 31.” Meanwhile, the company has pulled ahead its US white collar workers’ payroll. Apparently (unconfirmed), they’ve already sent out the checks for the week of May 25, 2009. “Other than the date change, all other payroll processes will remain the same in terms of paying employees at work or if they are on layoff,” a leaked memo from Marketing Maven Mark LaNeve reveals. According to the document, “This action is not an indication that GM plans to file for bankruptcy on or about June 1 . . . GM has determined this simple action — moving up the payroll pay date for this month — is the least the company can do to reduce any potential for disruption regardless of what happens.”

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  • Alex Nigro Alex Nigro on May 28, 2009

    Farago, I'm going to have to call you Cassandra from now on. You nailed it. June 1 is going to be busy for me, between keeping up on the GM bankruptcy and Microsoft's E3 press conference, even though most of it was leaked (expect announcements for a motion-sensing camera doohickey, Forza Motorsport 3, Alan Wake, etc.). I've got my bingo cards ready...

  • Reclusive_in_nature Reclusive_in_nature on May 29, 2009

    All Obama has to do is give his supporters the order to buy GM products and the lemmings would claw over each other to buy them.

  • Supremebrougham Supremebrougham on May 29, 2009

    educatordan: I too had an '87 Cutlass Supreme Brougham (hence my screen name), what a great car! Feel free to drop me a line (add an at yahoo to my screen name) and I'd be glad to provide you with a link to my old car's personal web page, and even some pics!

  • Taymere Taymere on May 29, 2009

    I've got 3 scenarios for you: Scenario 1. Less than 55% of bondholders agree to the 17 cents/$ haircut by June 1st. Right now about 35% have agreed already. Result? The deadline is extended for at least a few weeks while the PTFOA keeps trying to get it's ducks in a row. Entering Chapter 11 with that low a level of support especially if Gonzales hasn't ruled on Chrysler by June 1st would be too politically risky. Chapter 7 would mean one term Obama and Dems lose congress in 2010 and they lose 2010 Governor reelection race race for Ohio and Michigan. They wouldn't risk that, they will stall and try to line up more ducks. Scenario 2. Between 55% and 65% of bondholders agree to a settlement haircut by June 1st. In that case I think the PTFOA will take the concessions that they got from the bondholders and UAW and restructure outside BK provided no ruling yet on Chrysler's 363 sale. This way they are absolutely sure that Chapter 7 is avoided and they avoid having Grannie Bondholder cry on the news. Scenario 3. More than 65% of bondholders agree to the 17% haircut settlement. (unlikely to happen in 2 short days in my view). In this scenario, especially if Gonzalez has already ruled favorably on Chrysler's 363, PTFOA would be confident enough that a cramdown/363 will fly and GM will declare Chapter 11 BK Monday June 1st in NY. If they are right in their calculations Obama wins a 2nd term and Dems retain Congressional control in 2010. Why have I thought about this so much? Under both scenarios 1 and 2 my bonds maturing June 1st will get paid in full and I can accelerate my goal of becoming a millionaire by 2020 by at least 5 years. I have been reading the TTAC luxury car reviews and dreaming lately.