Aid seems to be going into a black hole, Chapter 11 the best option
Would we have thought in our wildest dreams that second best would be so bad? Well, GM, after all the battering it received from the Japanese, was still the world's number 2 car maker in 2008, with global sales of 8.36 million vehicles compared to Toyota's 8.97 million. Alas, the way they are going, even being number 1 would not have mattered.
So the D-day is June 1, 2009 – a date that'll adjudge the destiny of GM; a date that should see GM stakeholders cast their vote; a vote that will be memorable in the history of the US auto industry, even if painfully. After former GM Chairman & CEO Rick Wagoner’s exodus from the helm of the company, Prez Barack Obama's administration has given GM a deadline of June 1 – either to reach an agreement with bondholders to exchange $28 billion of debt into equity in GM, and with the United Automobile Workers Union; or file for bankruptcy. In case GM files for bankruptcy, a new comp any will be floated, which will include GM's healthy brands and manufacturing facilities, leaving behind the sick ones. Keeping in mind the bailout of $18.88 billion that GM received under the Bush administration after which it posted a mind boggling net loss of $52.8 billion for FY' 08, chances of getting another aid are very grim. “A lot depends on the survival plan, but filing for bankruptcy makes sense as of now,” asserts Christian Breitsprecher, Auto Expert, Sal Oppenheim. Obama has already rejected GM's plea for an additional $16 billion aid. However, if GM does file for bankruptcy, its bondholders may file a case against it, claiming that GM wrongfully pulled out $600 million from its Canadian subsidiary when it knew that insolvency was near.
Would we have thought in our wildest dreams that second best would be so bad? Well, GM, after all the battering it received from the Japanese, was still the world's number 2 car maker in 2008, with global sales of 8.36 million vehicles compared to Toyota's 8.97 million. Alas, the way they are going, even being number 1 would not have mattered.
So the D-day is June 1, 2009 – a date that'll adjudge the destiny of GM; a date that should see GM stakeholders cast their vote; a vote that will be memorable in the history of the US auto industry, even if painfully. After former GM Chairman & CEO Rick Wagoner’s exodus from the helm of the company, Prez Barack Obama's administration has given GM a deadline of June 1 – either to reach an agreement with bondholders to exchange $28 billion of debt into equity in GM, and with the United Automobile Workers Union; or file for bankruptcy. In case GM files for bankruptcy, a new comp any will be floated, which will include GM's healthy brands and manufacturing facilities, leaving behind the sick ones. Keeping in mind the bailout of $18.88 billion that GM received under the Bush administration after which it posted a mind boggling net loss of $52.8 billion for FY' 08, chances of getting another aid are very grim. “A lot depends on the survival plan, but filing for bankruptcy makes sense as of now,” asserts Christian Breitsprecher, Auto Expert, Sal Oppenheim. Obama has already rejected GM's plea for an additional $16 billion aid. However, if GM does file for bankruptcy, its bondholders may file a case against it, claiming that GM wrongfully pulled out $600 million from its Canadian subsidiary when it knew that insolvency was near.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
and Arindam Chaudhuri (Renowned Management Guru and Economist).
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