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(Wall Street Journal)   "Bin Laden is dead and GM is alive" but the latter is in jeopardy if the creditors that were illegally cut out have their way   (blogs.wsj.com) divider line 53
    More: Interesting, classical elements, Creditor Lawsuit, Osama bin Laden, unsecured creditors, gm bailout, creditors  
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3149 clicks; posted to Business » on 10 Oct 2012 at 12:07 PM (1 year ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2012-10-10 10:09:36 AM
this should be interesting
 
2012-10-10 11:34:51 AM
That's some expensive sour grapes.
 
2012-10-10 11:37:35 AM
no comment
 
2012-10-10 12:16:49 PM
The lawsuit is only about a billion dollars. GM made 1.4 billion last quarter.
 
2012-10-10 12:18:47 PM
They killed saab, they deserve to die too
 
2012-10-10 12:23:30 PM
I bet Bain Capital is in there somewhere.
 
2012-10-10 12:24:47 PM

dsmith42: The lawsuit is only about a billion dollars. GM made 1.4 billion last quarter.


In revenue or in profit?
 
2012-10-10 12:25:19 PM
Aren't unsecured creditors pretty much f'ed up the ass in bankruptcy?
 
2012-10-10 12:28:09 PM

Muta: Aren't unsecured creditors pretty much f'ed up the ass in bankruptcy?


Bingo. They're hoping for a settlement to make the lawsuit go away.
 
2012-10-10 12:28:39 PM

dsmith42: The lawsuit is only about a billion dollars. GM made 1.4 billion last quarter.


Losing almost 20% of your yearly revenue to a lawsuit is gonna fark up your company pretty bad.
 
2012-10-10 12:31:20 PM
"When I approved the sale agreement and entered the sale approval order I mistakenly thought that I was merely saving GM, the supply chain, and about a million jobs. It never once occurred to me, and nobody bothered to disclose, that amongst all of the assigned contracts was this lock-up agreement, if indeed it was assigned at all."

The judge sounds direly concerned.
 
2012-10-10 12:33:02 PM
"unsecured creditors" - a pretty important word in that article. Unsecured means you are at the rock bottom of the pecking order when it comes to working over the corpse of the bankrupt company.

However, the entire point of the bankruptcy action that GM was involved in was to fess up what its obligations are, figure out how to liquidate them "fairly" and keep the company able to function. That is why it exists. But the judge can only make a final order on it if he has been told the truth about all the interests at stake. If this additional factor was not made clear to the judge then it's possible that the sale itself might have to be revisited, or possibly the order may need to be revised to specifically exclude these additional interests, which will put them right back on GM's books (probably still never to be paid, but it sure farks up their financial status reports).
 
2012-10-10 12:35:14 PM

Muta: Aren't unsecured creditors pretty much f'ed up the ass in bankruptcy?


Sometimes. It can be rather complex, and they have less priority than most other creditors, but they still may get relief. It looks as though GM struck a deal to move some money to get some creditors to drop their claims, but if that loan was made after GM filed for bankruptcy and not disclosed to the bankruptcy judge - which is required by law - the old unsecured creditors' claims may still be viable and the judge could order GM to satisfy them. I think, anyway. I understand basic bankruptcy well enough, but when you start getting into really large, complicated bankruptcy proceedings, it starts going over my head.
 
2012-10-10 12:36:16 PM

Muta: Aren't unsecured creditors pretty much f'ed up the ass in bankruptcy?


From my understanding, they'd like part of their bankruptcy assfarking to be thrown out, arguing that the deal with the hedge funds caused it to be slightly less lubricated, and hence should have been disclosed to the judge.
 
2012-10-10 12:39:58 PM

Nabb1: but when you start getting into really large, complicated bankruptcy proceedings, it starts going over my head.


It also gets more and more difficult to describe via anal sex analogy.
 
2012-10-10 01:01:26 PM

Nabb1: I understand basic bankruptcy well enough, but when you start getting into really large, complicated bankruptcy proceedings, it starts going over my head.


My understanding is that this was a tremendously complex bankruptcy proceeding due to the political interest in it (GM goes south, unions lose lots of jobs, and that's bad news for politicians). Thus, there was a little sleight of ledger going on to reshuffle the order in which certain creditors were repaid. Some were moved ahead of others, and those who should have been made whole in a liquidation ended up being owed by a company that was a shell of its former self, essentially holding little but a bunch of debt and not near enough assets to cover the bills.

Factor in TFA (some creditors cutting deals, also essentially "jumping the line"), and it just gets messier.
 
2012-10-10 01:05:25 PM

Muta: Aren't unsecured creditors pretty much f'ed up the ass in bankruptcy?


Yes, but this was DIFFERENT! Because SOSHULISM and KENYAN USURPER!
 
jvl
2012-10-10 01:10:10 PM

Muta: Aren't unsecured creditors pretty much f'ed up the ass in bankruptcy?


Nope. If GM had assets left over after secured creditors were paid, those assets belong to the remaining creditors.

Normally, there are no assets left over so they take it without lube. The GM bankruptcy was "special".
 
2012-10-10 01:16:42 PM
(looks at GM finances)

Yeah, subby fails at math.
 
2012-10-10 01:16:44 PM

akula: Nabb1: I understand basic bankruptcy well enough, but when you start getting into really large, complicated bankruptcy proceedings, it starts going over my head.

My understanding is that this was a tremendously complex bankruptcy proceeding due to the political interest in it (GM goes south, unions lose lots of jobs, and that's bad news for politicians). Thus, there was a little sleight of ledger going on to reshuffle the order in which certain creditors were repaid. Some were moved ahead of others, and those who should have been made whole in a liquidation ended up being owed by a company that was a shell of its former self, essentially holding little but a bunch of debt and not near enough assets to cover the bills.

Factor in TFA (some creditors cutting deals, also essentially "jumping the line"), and it just gets messier.


my understanding was certain creditors were allowed to 'jump the line' because of government contributions. So the UAW got an incredible deal relative to what they would have gotten had GM gone completely bankrupt without government intervention. Other creditors got less of a good deal, but still better than what they would have gotten if it weren't for the taxpayer money thrown in to the pot.
 
2012-10-10 01:26:04 PM

Debeo Summa Credo: relative to what they would have gotten had GM gone completely bankrupt without government intervention


How does one go bankrupt without government intervention? Isn't bankruptcy court itself a government intervention?
 
2012-10-10 01:31:34 PM

Dead for Tax Reasons: They killed saab, they deserve to die too


Saab engineers killed Saab. They were given a budget and all the parts they could ask for. The instead went way overboard and wouldn't listen to the boss. Same thing would have happened at any company.
 
2012-10-10 01:44:26 PM

Debeo Summa Credo: akula: Nabb1: I understand basic bankruptcy well enough, but when you start getting into really large, complicated bankruptcy proceedings, it starts going over my head.

My understanding is that this was a tremendously complex bankruptcy proceeding due to the political interest in it (GM goes south, unions lose lots of jobs, and that's bad news for politicians). Thus, there was a little sleight of ledger going on to reshuffle the order in which certain creditors were repaid. Some were moved ahead of others, and those who should have been made whole in a liquidation ended up being owed by a company that was a shell of its former self, essentially holding little but a bunch of debt and not near enough assets to cover the bills.

Factor in TFA (some creditors cutting deals, also essentially "jumping the line"), and it just gets messier.

my understanding was certain creditors were allowed to 'jump the line' because of government contributions. So the UAW got an incredible deal relative to what they would have gotten had GM gone completely bankrupt without government intervention. Other creditors got less of a good deal, but still better than what they would have gotten if it weren't for the taxpayer money thrown in to the pot.


That sounds about right. It was something along the lines of "We're stepping in to bail things out, so we're making the rules special." I'm not sure how well these other creditors did/should have made out, but this one definitely did not pan out according to the previously existing rules. For example, the unions were made whole, but nonunion workers got the shaft (Delphi's workers lost a good deal, apparently with Treasury department approval), even though they should have been treated pretty similarly.
 
2012-10-10 01:45:37 PM
That boycott is going to hit them hard any day now. Aaaaany day.
 
2012-10-10 01:47:45 PM
Does no one listen to GM's CEO? He can't wait to get everything he can possibly move to China moved there.

And, where was it that the angry crowd was chanting, "We are all Osama!" recently? Seems like it was in one of them there Obama supported Arab Spring states.....
 
2012-10-10 02:02:48 PM

cgraves67: dsmith42: The lawsuit is only about a billion dollars. GM made 1.4 billion last quarter.

Losing almost 20% of your yearly revenue to a lawsuit is gonna fark up your company pretty bad.


That was net profit, not revenue. I am not saying it won't hurt, but it is not going to drive them into bankruptcy again. Submitter was just trolling.

http://finance.yahoo.com/q/is?s=GM
 
2012-10-10 02:06:49 PM

ghare: Muta: Aren't unsecured creditors pretty much f'ed up the ass in bankruptcy?

Yes, but this was DIFFERENT! Because SOSHULISM and KENYAN USURPER!


Well actually yes. The GM bankruptcy was arranged such that some normally unsecured parties ended up with their assets covered. If these unsecured creditors can say "We should have been in front of those guys." they may have a case.
 
2012-10-10 02:10:39 PM

Mr. Eugenides: ghare: Muta: Aren't unsecured creditors pretty much f'ed up the ass in bankruptcy?

Yes, but this was DIFFERENT! Because SOSHULISM and KENYAN USURPER!

Well actually yes. The GM bankruptcy was arranged such that some normally unsecured parties ended up with their assets covered. If these unsecured creditors can say "We should have been in front of those guys." they may have a case.


That bankruptcy courts are courts of equity will not help their (these unsecured creditors) case.
 
2012-10-10 02:23:34 PM
White hous staffers asked Obama for 6 months if theycould go get Obama.

They had to beg him to get the apprval.

Worthless in cheif.
 
2012-10-10 02:27:10 PM

TIKIMAN87: White hous staffers asked Obama for 6 months if theycould go get Obama.

They had to beg him to get the apprval.

Worthless in cheif.


Drinking early?
 
2012-10-10 02:41:59 PM

HotWingConspiracy: Drinking early?


no such thing
 
2012-10-10 03:22:18 PM

dsmith42: The lawsuit is only about a billion dollars. GM made 1.4 billion last quarter.


Revenue or profit. :rolleyes:
 
2012-10-10 04:11:51 PM
The creditors? Like every single bond holder, such as the Indiana state retirement fund?
 
2012-10-10 05:47:28 PM
So... people who are almost guaranteed to be farked in a bankruptcy proceeding did, indeed, got farked.

Biatching about it doesn't change the status of being farked. Nor does pretending that somehow said creditors being farked make Biden's new catch phrase any less accurate.
 
2012-10-10 05:52:28 PM

Muta: Aren't unsecured creditors pretty much f'ed up the ass in bankruptcy?


Apparently not if they're the UAW.
 
2012-10-10 06:13:56 PM
www.marfdrat.net
www.rossputin.com
 
2012-10-10 07:21:56 PM

OrygunFarker: Dead for Tax Reasons: They killed saab, they deserve to die too

Saab engineers killed Saab. They were given a budget and all the parts they could ask for. The instead went way overboard and wouldn't listen to the boss. Same thing would have happened at any company.


GM parts by any chance?
 
2012-10-10 08:31:19 PM

kg2095: OrygunFarker: Dead for Tax Reasons: They killed saab, they deserve to die too

Saab engineers killed Saab. They were given a budget and all the parts they could ask for. The instead went way overboard and wouldn't listen to the boss. Same thing would have happened at any company.

GM parts by any chance?


Saabs sucked anyway. My memory from the early 70s was an odd V-4, apparently sourced from a Ford tractor plant, with a surprisingly narrow powerband, a failure-prone transmission, and a wiring harness that appeared to have been drawn up by a schizophrenic in the midst of a full-blown psychotic episode. All this pushing a body with rather ungainly styling, stamped out of sheet metal thicker than that found on contemporaneous Cadillacs. I guess they improved the performance and made them slightly less stupid-looking by the late '70s, but I think they remained tinkertoys, and expensive to repair.
 
2012-10-10 10:23:11 PM

kg2095: OrygunFarker: Dead for Tax Reasons: They killed saab, they deserve to die too

Saab engineers killed Saab. They were given a budget and all the parts they could ask for. The instead went way overboard and wouldn't listen to the boss. Same thing would have happened at any company.

GM parts by any chance?


actually, they were given GM parts but decided to develop their own parts from scratch.

as a former Saab owner, I can tell you that it did them little good. Saab consistently fared worse than GM in quality and reliability surveys for years, and yet Saab fans dismiss GM parts as worse. delusional.
 
2012-10-10 10:42:53 PM

TheBeastOfYuccaFlats: That's some expensive sour grapes.


THIS.

Some people just can't stand it when Detroit wins and the transplants lose. Naturally, they take it out on General Motors given that Chrysler isn't as soft as a target.

That, and unlike Ford, they haven't made every single vehicle look like it came from Thirdworldistan. They just confine it to Buick.


HotWingConspiracy: That boycott is going to hit them hard any day now. Aaaaany day.


The more derp that someone has for General Motors, the more car I can buy with my dollar. I wonder how much derp it'd take to put a RWD V8 car in the price range of mere mortals - where it should always be.
 
2012-10-11 12:22:43 AM

cretinbob: I bet Bain Capital is in there somewhere.

 
2012-10-11 12:24:21 AM

invictus2: cretinbob: I bet Bain Capital is in there somewhere.


static.guim.co.uk
 
2012-10-11 03:43:41 AM

Cinaed: So... people who are almost guaranteed to be farked in a bankruptcy proceeding did, indeed, got farked.

Biatching about it doesn't change the status of being farked. Nor does pretending that somehow said creditors being farked make Biden's new catch phrase any less accurate.


No. we are talking about the bond holders who are supposed to be first in line for the assets of a company going into bankruptcy. That is why bonds pay less than most other forms of investments because they are more secure. If the company had been forced into a regular bankruptcy then the bond holders would have come out quite a bit better. Instead the government decided to rearrange who got what and screw the bondholders so they could appease the unions.

Anyone who buys bonds from a unionized company should take this into account [i.e. the bonds must pay more to make up for the new level of risk].

Personally I no longer invest in any unionized American company.
 
2012-10-11 07:43:51 AM

CujoQuarrel: No. we are talking about the bond holders who are...


A bond holder is a creditor. It's an IOU from the company to the individual/group/organization/institution that handed over the money. Creditors can get farked in bankruptcy proceedings. This is not a new phenomenon. I suspect the reasons for the griping has little to do with Unions, and far more to do with bankruptcy law and process. How, exactly, would a non-union company going through the same situation fare differently?

Oh, and this was GM Canada, so.... that's fun, good on focusing on the domestic US side. The creditors AGREED to the payout, the 33 cents on the dollar or so payment to wipe the slate clean. The creditors practically celebrated at the deal.
 
2012-10-11 08:04:29 AM

Cinaed: The creditors practically celebrated at the deal.


Especially given that if GM had outright failed they would have dragged down a number of other industry players with them.... players that probably owe the same creditors money, too.
 
2012-10-11 09:13:30 AM

incendi: Cinaed: The creditors practically celebrated at the deal.

Especially given that if GM had outright failed they would have dragged down a number of other industry players with them.... players that probably owe the same creditors money, too.


I suspect it was a less benevolent motivation. At the time, getting 33% probably looked probably looked a helluva lot better than getting nothing. Now GM is doing rather well, and they want the other 66%, if not more.
 
2012-10-11 09:32:34 AM

Cinaed: I suspect it was a less benevolent motivation. At the time, getting 33% probably looked probably looked a helluva lot better than getting nothing.


That's what I'm saying - 33% on GM's debt is a hell of a lot better than 0% on GM plus additional defaults/bankruptcies from GM's supply chain. It wasn't a kindness, it was enlightened self-interest.
 
2012-10-11 11:27:13 AM

CujoQuarrel: No. we are talking about the bond holders who are supposed to be first in line for the assets of a company going into bankruptcy


No, we're not. We're talking about unsecured creditors. RTFA.
The secured bondholders who wanted to force a chapter 7 (where they would certainly be first in line) lost their bid to do so in bankruptcy court. Get over it.

Nabb1: In revenue or in profit?


cgraves67: Losing almost 20% of your yearly revenue to a lawsuit is gonna fark up your company pretty bad.


Bullseyed: Revenue or profit. :rolleyes:


So, some idea about how big GM is. GM does about 40 billion in revenue per quarter. 1.3 billion would hurt but wouldn't kill them any more than it would bring Bin Laden back to life.
For example, Q2 2012 they made about 1.5 billion in profit while the previous year, their second quarter profit was about 2.5 billion. If they had to pay out 1.3 billion in a lawsuit, it would be a big deal, as in "sorry guys our profits aren't as high this quarter because we had to pay out a big claim".
 
2012-10-11 12:17:35 PM

tallguywithglasseson: it would be a big deal, as in "sorry guys our profits aren't as high this quarter because we had to pay out a big claim".


That's usually pronounced "buying opportunity"
 
2012-10-12 05:57:45 PM

sethstorm: TheBeastOfYuccaFlats: That's some expensive sour grapes.

THIS.

Some people just can't stand it when Detroit wins and the transplants lose. Naturally, they take it out on General Motors given that Chrysler isn't as soft as a target.

That, and unlike Ford, they haven't made every single vehicle look like it came from Thirdworldistan. They just confine it to Buick.


HotWingConspiracy: That boycott is going to hit them hard any day now. Aaaaany day.

The more derp that someone has for General Motors, the more car I can buy with my dollar. I wonder how much derp it'd take to put a RWD V8 car in the price range of mere mortals - where it should always be.


I got my Mustang GT for slightly less than 20k back in '07. Had only 5k miles on it. Looks like starting MSRP for the '13s is about 22k right now.
 
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