German newspaper Die Welt had reported on Saturday that GM and Opel seems to be preparing for insolvency at Opel, having hired three law firms with renowned insolvency experts. GM denies the report, writes Reuters. “This scenario is currently not on the agenda,” a GM Europe spokesman told Reuters on Sunday. Note the careful usage of “currently” and “agenda.”
Die Welt says GM Europe would be advised by Baker & McKenzie as well as Clifford Chance, while the management of Adam Opel GmbH had hired Heidelberg-based firm Wellensiek. GM doesn’t deny that they have hired counsel: A GM Europe spokesman said the company had hired the firms to assess the effect of potential restructuring measures. Meanwhile, there is growing outrage in Germany about the fact that Opel never paid tax in Germany because it transferred profits to its U.S. parent.
This according to unnamed members of the German cabinet. “It cannot be that the German taxpayer has to save a company that transfers its profits to the United States,” Michael Fuchs of the Christian Democrats (CDU) told Bild am Sonntag. According to a report by Die Welt, it’s even worse: Opel paid €19.5m in taxes, but received a tax refund in the amount of €48.5m
A GM Europe spokesman did not comment on the reports but said the company had invested several billion Euros since 2002 in the expansion of Opel’s four German sites, a great deal of which went into the Ruesselsheim plant, near Frankfurt, where Opel has its headquarters.
The tax imbroglio doesn’t help Opel’s chances to get government money. The German cabinet is clear on one aspect: The submitted business plan is not enough. Government spokesman Thomas Steg said: “It is totally clear that what Opel has put on our table is totally inadequate as a basis for a decision. A decision will take weeks, until end of March at least.” Pushing Opel further down the road to insolvency.
Here some tidbits from Berlin (courtesy Reuters:)
Finance Minister Peer Steinbrueck told students in Bonn on Monday he would be “very reserved” with regard to state aid for Opel, and that Opel management had not yet provided the government with an adequate concept for the carmaker’s future.
Chancellor Angela Merkel has left open the possibility of granting Opel state aid, but last week she told fellow Christian Democrats that the carmaker is not systemically crucial to the German economy, a party official told Reuters.
Interior Minister Wolfgang Schaeuble said in a newspaper interview on Friday that insolvency could be an option for Opel though it need not mean the carmaker going bust.
Foreign Minister Frank-Walter Steinmeier, who will lead the SPD’s challenge against Merkel in the election, has branded Schaeuble “irresponsible” for bringing up potential insolvency.
An Economy Ministry spokesman said the government was not preparing a change to German insolvency law to help Opel.
Thus, the house of cards starts to fall…
Could someone explain how Opel – a division of GM for over 75 years – could declare bankruptcy, but the main company can keep on going?
I understand that Opel has a board of directors – which is kind of odd for a company division.
GM Canada keeps threatening bankruptcy (and it’s working) however to me, it looks like just an other manufacturing division – not a stand alone entity.
Opel is a German company, a GmbH, one of the lowliest species of German companies. Yes, it can go bust without the mothership doing so. Saab did the same.
Borgward died in 1961, Opel will die in 2009.
GM won’t have any chassis engineering expertise for cars except in China (GM-SAIC, a 50% owned JV) and South Korea (GMDaewoo, a 50.1% owned “subsidiary”).
So much for “see the USA in your Chevrolet”. In the rest of the world outside North America, “Chevrolet” cars are nothing other than Daewoos with a bow-tie added (except for the few Corvettes sold, the VERY few SUVs sold and the rear drive Holdens rebadged for specific markets).
“GM won’t have any chassis engineering expertise for cars except in China (GM-SAIC, a 50% owned JV) and South Korea (GMDaewoo, a 50.1% owned “subsidiary”).”
Isn’t all IP and R&D transfered to the states? I mean, what they are bankrupting is some german factories with nothing to manufacture. It’s a dead weight, thrown at german taxpayers.
Speaking of wich, it would be interesting to know how much Opel has payed in german taxes for, say the last 20-30 years or so. And how much of their profit that has been transfered to GMNA.
Well the IP & R&D may be transferred, but the brains behind all that info is in Germany. GM will no longer have access to that source once Opel goes TU, unless they operate as an engineering subcontractor to GM (unlikely, I would think).
menno…I fear the same…that once Opel is gone, all volume GM car platforms will be engineered in Korea. Neither the Korean nor Chinese facilities that will be doing this platform engineering have anywhere near the reputation or abilities vs. what the Germans have been doing. Please see Saturn Astra vs. Suzuki Forenza for your proof. Or Chevy Malibu vs. Suzuki Verona. With the loss of Opel, you will really see GM products go downhill.
Regarding the IP, there are stories making the rounds in Germany that the bills for all that IP weren’t paid, hence the patents still belong to Opel.That could become a long and interesting lawsuit, especially with the U.S. and German governments being owners of the parties ….
I was under the impression GM created and consolidated all it engineering. I believe that was the excuse for GM not letting Opel go as it was too entrenched into GM (it didn’t have it’s own r&d, design, supply lines etc.) and couldn’t stand on it’s own feet as a company.
Can someone enlighten me?
Kurt: R&D-wise , it’s more like the other way around ….
Wow,
What would be the reaction in the US if one of the transplants was in this situation?
So much for “see the USA in your Chevrolet”.
I made the pun once before, but what the heck: See the R-o-K in your Chev-ro-let!”
Regarding the IP, there are stories making the rounds in Germany that the bills for all that IP weren’t paid, hence the patents still belong to Opel.That could become a long and interesting lawsuit, especially with the U.S. and German governments being owners of the parties ….
Didn’t GM put up chunks of Opel as loan collateral in the US? Doesn’t that complicate matters in this regard?
Interesting problem for lawyers. You put something as a collateral whose acquisition is not perfect (as in not payed for), more so, you demand royalties for the usage of said property from the seller. Add the problem of two jurisdictions and you have one heck of a (potential) lawsuit.
Bertel, your first post on this subject had the word Steuerhinterziehung, seems more profetic every day.
BTW, if i remember correctly, Wagoner said during the congressional hearings that some “european assets” where used as a collateral for the company’s credit line, so there could be more from where this came from.
Yes, I think Opel is hocked up to it’s logo by owner, Generous Messup.
So the question is; if you have a wholly owned subsidiary in a foreign nation, used every stitch of it as collateral and borrowed againt it, then walk away from it – what about the lender?
Just whose property IS Opel?
I know that as an individual, if I own something outright (let’s say, a classic car), borrow against it, put it up as collateral, then tell the lender “sorry, I can’t continue with the payments and the restoration on it – stopped paying the restoration shop and they’ve put a mechanic’s lein on it and seized it” then the banker is going to come after MY hide to get money back since the bank’s lost out on the collateral.
Yes? No? Beuller?
So how the hell is this different for Generous Messup? And if it is, why should it be?
Too big to be accountable
@ dzwax
Too big to be accountable
Absolutely spot on! You gotta’ wonder if anyone can get their head around the incompetent mess that is GM.
@ Kurt
I was under the impression GM created and consolidated all it engineering.
I’m a bit out-of-touch with present day Holden, but I believe it’s still a self contained engineering unit here in Australia.