[BigAls87Z28]

Originally Posted by damon_Z

Not all Chapter 11 companies end up in Chapter 7 (complete liquidation).

Originally Posted by BonzoHansen

It is not a yes/no question. I’d vote yes BUT…….

I don’t believe chp 11 = chp 7 in a month. No way. However I think this mess is a direct result of the housing/Freddie/Fannie fiasco. Therefore perhaps some assistance may be warranted given the correct provisions.

GuyM over on CZ28.com

Chapter 11 would hold creditors at bay while GM reorganizes. The problem is that if GM declared bankruptcy, it would never recover.

The news would scare off any remaining customers. Only the people who would buy GM stocks out of loyalty (and watch their money evaporate by over 90% in less than 12 months) would purchase GM cars at that point. There will be plenty of other automakers to give hard earned $20K & $30K+ where there are no doubts about their ability to stick around for most of the warranty.

But just as important, the company has to have the potential of regaining solvancy. By right, GM should have investors eager to buy controling interests in or even buy out GM. Regardless as to where the stocks are, GM has a large amount of assets that can be sold off. However, there's no one, and with good reason. GM's debt is far greater than it's assets. While GM will likely find takers as they themselves sell off parts, no one is banking on GM as a whole due to those debts.

In the midst of all this, suppliers could simply stop delivering to GM and demand payment. Especially if they even thought GM was going to declare bankruptcy (they would get only a fraction of money owed under bankruptcy, and even then the timetable for repayment would be uncertain).

Nobody can buy GM, and bankruptcy (even involuntary, which can be done via creditors) will do no good, and infact will enflame things even more.


But the thing about Chapter 11 bankruptcy is that it's going to take money to reorganize. Money that GM doesn't have & money that no one will lend them (which is where a government backed loan would fit in). It's at this time GM would likely move to Chapter 7 Liqudation, and GM would be sold off in parts, with overdue payments to venders likely to be the first place the money goes.

I’ve got a new plan. Instead of giving it to the companies, lets look at things form “we’re going to pay one way or another” view

* Fully fund the VEBAs so the UAW can take over retiree HC (unless forcing them to Medicare is cheaper, then do that & throw billions at Medicare)
* Over fund the pension plan and punt it to the PBGC so they can take over the retiree pensions.
* Freeze the pension plan; offer only 401k plan, also no more health benefits at retirement. There would of course need to be some grandfathered participants and all to deal with based on seniority, etc. –
* FORCIBLY buy out anyone within 5 years of retirement at full benefit + 65% salary for time from now until retirement age. No UI.
* Offer scaled down buyouts to other employees.
* Any ptp left with earned pension credits put equivalent cash in their 401k and that is all, no more pension liability for any active employee

Retiree $$ problems gone. We’re going to pay them one way or another, might was well do it right. Oh yeah….

* Cap all total comp for any employee (from the CEO to BiGal) at $500k max until profitability is restored for 4 straight quarters. I may be swayed to allow high priced options ($30 strike price?) to upper management.
* Force ½ of the Directors out. Chrysler is a strange bird being a private firm, but I’m guessing a similar deal can be cut.
* Pay the costs of getting rid of all idle plants/assets - that is a big deal, given cleanup, etc. Spin it as an EPA win.
* Any $$ left? Pay the costs of getting rid of PMD/Buick/GMC/Mercury/(dodge?)

Move on, good luck.

GM has made some serious moves to save a lot of money, but they wont see that till 2010.

GM would need a bail out the size of the one AIG got in order to enjoy the rest of 2009.

It would cost GM 2 billion per dealer, but they dont have to kill all the dealers.
Pontiac is on its way out, so you move Saturn over to the former PBG dealers. That gives Saturn more dealers, that makes dealers happy that they didnt lose any cars, in fact get a FULL LINE again.
Buick is doing well in China, as is Chevy. GM needs to figure out how to make a profit on these cars, not just trucks.
GM's problem isnt sales numbers, its profit.