Bankruptcy filing possible for General Motors?

[Guest MonkeySee]

The GM CEO says automaker could still be forced to file for Chapter 11 despite federal loans. Do you think the billions of dollars will keep GM solvent? I would hate to see the automaker go under.

 

 

DETROIT (AP) -- Despite receiving billions in federal loans designed to prevent the automaker from failing, General Motors Corp.'s chief executive said a bankruptcy protection filing could still be possible, according to reports.

 

GM doesn't want to file for Chapter 11, but the Detroit-based automaker's long-term viability is "not 100 percent" certain right now, Chairman and CEO Rick Wagoner told The Wall Street Journal and The New York Times for Tuesday stories.

 

But Wagoner said he's confident that the automaker will be able to avoid a bankruptcy protection filing this year.

 

GM recently received $9.4 billion in federal loans and could get another $4 billion if it's able to negotiate labor cost cuts and reach a deal with its bondholders to lower its debt.

 

Wagoner said he met last week with restructuring advisers and left convinced "there are options that can work in each of these areas." He added that he's optimistic about talks with the union.

 

But Wagoner warned that GM could be forced to ask for additional loans after March 31.

 

GM, along with Chrysler LLC which received $4 billion in loans, has until Feb. 17 to hammer out changes to its current labor contracts that would bring worker costs in line with those of employees at foreign auto companies' plants in the U.S.

 

UAW President Ron Gettelfinger has said the union will approach President-elect Barack Obama's administration to end what he called unfair requirements in the loan terms for concessions from the union.

 

Meanwhile, both automakers must negotiate with the bondholders to substantially lower their debt. But to do so, the automakers need to have other aspects, such as unions concessions, figured out.

 

GM shares fell 13 cents, or 3.1 percent, to $4.02 in morning trading.

 

AP Tuesday January 13, 11:17 am ET

 

[Guest fountainhall]

I would hate to see the automaker go under

 

I am sure the Toyotas, Hyundais, Mercedes et al do not share your concern! The British motor industy did its kamikaze number years ago - a result of hugely inefficient management and failure to adapt to changing market circumstances. Why should a US company which has got it all so wrong for so long meet a different fate?

[Guest shebavon]

 

This is one of the clearest examples of Too Big To Fail syndrome in recent memory. There is no way the Democrats can allow this to happen.

 

GM is not going to go into bankruptcy, and neither will Citibank.

[Guest fountainhall]

Citibank now can't because the US government is a major shareholder. As are the sovereign wealth funds of Singapore and one of the Middle East States, both of whom bought in when the shares were around US$30. I remember Singapore's Lee Kwan Yu justifying the investment (from the fund managed by his daughter-in-law if I remember correctly) by saying the fund could hold on for 10 years if necessary. I bet existing shareholders hope he's right as the price is now about $4.50!

[Guest MonkeySee]

This is one of the clearest examples of Too Big To Fail syndrome in recent memory. There is no way the Democrats can allow this to happen.GM is not going to go into bankruptcy, and neither will Citibank.

I would hate to see GM, Ford, or Chrysler go under. I do not like the idea of government bailouts, but these are extraordinary times. The US does not have much of a manufacturing base left and it would be nice to save the car industry. If the government can give the banks billions with no strings attached, I guess some billion dollar loans to the car makers will not hurt.