This is the make-or-break week for General Motors. It either comes up with some miracle plan that satisfies both its bondholders and its workers or it declares bankruptcy. Most of the smart money is on a bankruptcy filing, even before the June 1st deadline.
Not that filing bankruptcy is going to make things much better. As Bill Visnic writes in a piece on AutoObserver, "If GM takes another $7 billion-plus after June 1, government loans - extended through the Treasury Department's Troubled Asset Relief Program (TARP) program - will exceed $28 billion. Add that indebtedness to the nearly $70 billion combined that GM lost in 2007 and 2008 and the company is approaching an astounding $100 billion "loss" in the past two-and-a-half years."
Yes, there is no doubt, things can get worse for GM.
Anyone have any predictions? Liquidation? Move to just two brands? Come out of it stronger than ever?
AutoObserver: GM Working Toward $100 Billion in the Red; Bankruptcy Filing Imminent
rsholland says:
09:50 AM, 05/26/09
2 brands. Chevy and Cadillac.
m6vx says:
10:00 AM, 05/26/09
Wow. And I thought Chrysler was in bad shape.
My biggest question - how is Ford keeping its head above water?
Or are they just a few months further down the line than GM?
stovt001 says:
10:02 AM, 05/26/09
I vote 2 brands, Chevy and Cadillac, as well. Rename it Chevrolet Motors while they're at it. The government won't allow liquidation. If it comes to that, they'll set it up as a permanently nationalized, subsidized company. Yay.
rsholland says:
10:11 AM, 05/26/09
"My biggest question - how is Ford keeping its head above water?"
By wooing "former" GM and Chrysler customers.
greenpony says:
10:58 AM, 05/26/09
Ford made several serendipitous moves that put them in a better financial position (for avoiding bankruptcy) than its domestic competitors. It dumped Aston Martin, Jaguar, and Land Rover. It sold some of its stake in Mazda. It procured additional loans (I believe they went so far as to use the “blue oval” symbol as collateral). All this before the economic crisis came to a head. GM was left scrambling to unload brands to few or no potential buyers –- kind of like trying to sell a house in this market. Yeah, you may be able to sell, but you won’t get the price you want to get. That is the biggest reason why GM is headed to bankruptcy while Ford thus far has been able to avoid it.
rsholland says:
11:13 AM, 05/26/09
That too.
iskch says:
12:37 PM, 05/26/09
GM has no future. Too much debt. Not even selling every single brand they will be able to paid off the debt.
altimadude00 says:
12:58 PM, 05/26/09
Mualaly (sp) is pretty good at restructuring companies, and I bet he's got a lot to do with keeping Ford above water.
As for GM, I'm glad I'm not a stockholder. The UAW got too greedy, GM made too many concessions, and now both the sailor and the rat are going down with the ship.
estreka says:
06:19 PM, 05/26/09
The thing about bankruptcy is, you need to know when to declare it. It can't just be the last ditch option. If GM had declared several months ago, they would have the cash and the political pull to come out decently well. Now they owe everyone money and, even worse, they owe lots of favors. They don't even own their own company anymore.
Of course this all supports the anti-bankruptcy arguers out there, but the truth is that GM really could have made profound changes under protection before the UAW and the US government bought huge shares.
Indeed, as Altimadude stated, I'm glad I sold my stock in GM back when it was $35.