Here’s the (warning) 87-page ruling that allows “Old GM” to sell its best assets to “New GM.” The bottom line: Judge Robert E. Gerber of the U.S. Bankruptcy Court for the Southern District of New York brushed aside objections by dissident bondholders and product-liability claimants. Judge Gerber accepted the government/bankrupt automaker’s argument that there was no alternative to the Old-to-New-GM asset sale save liquidation, which would be “a disastrous result for GM’s creditors, its employees, the suppliers who depend on GM for their own existence, and the communities in which GM operates.” What’s more (or less), “In the event of a liquidation, creditors now trying to increase their incremental recoveries would get nothing.”
Before the ruling, TTAC contributor Steve Jakubowski told us the that judge was largely sympathetic to his argument that New GM should retain legal responsibility for the products created by Old GM. Fat lot of good that did, as The Wall Street Journal reports:
In his ruling, Judge Gerber said the question of whether the new GM should be subject to so-called “successor liability” represented “the only truly debatable issues in this case.” But the judge said he was bound by legal precedent – including Chrysler’s recent sale to Fiat SpA free of such liabilities – in not making GM go further than it already had on product-liability claims.
Jakubowski will appeal. “Injuries before New GM becomes official will not be covered by New GM,” the lawyer told us. “Injuries after closing are covered.” Meanwhile, The Detroit Free Press provides a profile of the man assigned to “lead” Old GM into oblivion: Al Koch.
Koch comes to praise ex-GM CEO Rick Wagoner (“You feel badly for a guy that you like. Rick’s a guy who worked his tail off for the company for a long time”) and to bury him (“Even as former Chief Executive Officer Rick Wagoner and others at GM kept warning that consumers would not buy vehicles from a bankrupt automaker, the company was quietly preparing for Chapter 11”). Note: told ya.
Strangely, The Freep doesn’t ask Koch how much he or his firm charged Old GM so far, or will charge New GM to “dispose of 50 surplus GM properties and wrangle with bondholders, product liability lawyers and others trying to grab a few crumbs from what’s being discarded by GM.” Brrrr.
Uncle Sam’s set aside $1.175 billion (up from $950 million) to euthanize Old GM. It’s not clear whether Alix’s crew will wet their beak from that billion, or get a separate pay-off. Lest we forget, a trustee for the feds called GM’s previous bankruptcy-related legal fees gross and unjustifiable. So much for that then. And according to a source speaking to TTAC about the cost of environmental clean-up, the money assigned in that regard is woefully inadequate. TTAC is investigating.
So long as there is an outstanding balance to the American taxpayer, regardless of whether or not it’s “forgiven”, I will not purchase any GM or Chrysler product.
Thankfully, I am still free (enough) to choose.
Good. Now new GM can get on with survival.
I’m not surprised. The bondholder’s claims and the product liability claims didn’t derail the Chrysler sale, and I thought all along it was unlikely they’d derail GM’s restructuring.
bluecon :
July 6th, 2009 at 8:01 am
Take care of the lawyers and the unions.
The message to investors is, don’t invest in US industry. And it looks like they are getting the message loud and clear.
No doubt. It’s obvious that many years of law and investor protections were destroyed overnight. I suspect the amount of capitol fleeing the US will continue to increase.
Anybody catch that now India is Joining Russia and China in calling for a new reserve currency?
I told you that Gerber is a tool.
This is one step closer to liquidation.
Everyone said “you can’t do a bankruptcy this fast. No way”. Well they were right. GM and Chrysler didn’t do a bankruptcy. They did a “quick rinse” just like Obama said they would.
In a real bankruptcy things actually change. New management, new products, old products die, contracts are shredded and rebuilt, etc. etc.
Welcome to the new GM, same as the old GM.
RangerM?
+ 1
Summary article on who gets what…
http://freep.com/article/20090706/BUSINESS01/90706019
Anyone know an IUE retiree from GM? You might want to clip some coupons to send them..
Thats an interesting piece in the Freep. As a CAW
retiree its frightening to see how quick benifits
get slashed. However”slashed/cut” has a better sound than lose.
In Canada we have two assembly plants left. The flex plant is ultra modern running GM hotest product the Camaro. Camaro is running steady days,
and lots of O.T. The other line is running Imapla
two shifts. Down weeks are scheduled,with more coming I speculate.
The Impala dollar for dollar is one of the best buys,on the market today. The Impala is a reliable
well put together vehicle.
Having said that,the big Chev is getting a little long in the tooth. I fear that with the
American taxpayer owning most of GM,any new bread and butter product will go south of the border.
On a positive note GM Canada is not bankrupt.
With the Canadian government owning 12% combined
with CAW concesiions, and our lower health care costs,we have a hope. Though I’m not crazy about the odds.
”a disastrous result for GM’s creditors, its employees, the suppliers who depend on GM for their own existence, and the communities in which GM operates.”
I’m still confused as to whether something illegal was done here. It ain’t right, but was it illegal?
I ask b/c I am an unsecured creditor in a Ch. 7, and I’ll likely get 2% of what I’m owed. This while the CEO walks away with several hundred thousand dollars in salary and bonuses. Not illegal, but not ethical.
I don’t think there has been even one issue that Judge Gerber has ruled against the (Obama) government arrangement.
Sounds like the fix is in.
Nice pic; the signs look like gravestones to me. How apropos.
jkross22 :I ask b/c I am an unsecured creditor in a Ch. 7, and I’ll likely get 2% of what I’m owed. This while the CEO walks away with several hundred thousand dollars in salary and bonuses. Not illegal, but not ethical.
Sadly SOP in American business these days. I Just disentangled myself from a company that will be C7 in less than a year. My spidey senses started tingling when I started having to chase them for money. Then they stopped press releases and I knew I was right. They have now admitted to major problems and are looking for someone to buy them. Will never happen.
They managed to make a fairly respectable amount of cash decrease by two thirds, they’d have to go C7 right now to pay everybody and the poor investors but they won’t. They’re going to burn through that money first and, oh yeah, the big guys all just got big bonuses and raises and then started laying off people.
I’ve said it before on this board somewhere but there needs to be a major change in corporate governance rules to get management back to the task of making decisions that result in better products and services from the company instead of spending time figuring out new ways to get ever more money for themselves from the company.
OK, end of mini-rant.
I’m still confused as to whether something illegal was done here. It ain’t right, but was it illegal?
Everything in the two cases was legit. The conspiracy theorists were asked numerous times to provide any details of legal wrongdoing and failed abysmally.
That they continue to trumpet false claims is a clear indicator of either their intelligence or trustworthiness.
If the Pontiac brand is part of “old” GM, that means that it will be sold off, like all the other distressed assets that will not transfer to the restructured company.
GM may have wanted to kill Pontiac, but I think once it’s part of the old company, they can’t control how the court sells off former assets.
Someone will buy the Pontiac brand.
Everything in the two cases was legit. The conspiracy theorists were asked numerous times to provide any details of legal wrongdoing and failed abysmally.
That they continue to trumpet false claims is a clear indicator of either their intelligence or trustworthiness.
There were no “conspiracy theorists”, just more namecalling from you as you say that those who disagree with you are stupid liars. Discrediting opponents (as opposed to their position) is right out of the Alinsky playbook.
The fact remains that a number of respected law professors and financiers including financial supporters of Obama have said that the treatment of senior and secured creditors in the Chrysler bankruptcy were highly irregular and could jeopardize investments. You can pound on the table all you want but the fact remains that senior secured creditors were screwed in favor of the UAW because Obama was able to pressure enough of the creditors who were TARP recipients to cave.
Save your leftist cant for your fellow travelers.
Isn’t President Obama’s new suit just fabulous?
lw:
Anyone know an IUE retiree from GM? You might want to clip some coupons to send them..
I’ve been aware that there was some tension between the UAW and other unions at GM. (I’ve known ex-GM machinists who are a bit disgruntled). However, I didn’t think things were so far gone that a minor union like the IUE would be cut off completely.
Anyone know the details on this?
Well, I for one welcome our new bankruptcy court-approved overlords. I also think the lawyers should get paid even more, there should be no changes in management, the list of terminated dealers should be kept secret, buyers of “old GM” cars should not be warned they’ll have no legal protections, the UAW should go on strike unless there’s a 40% pay raise in 2010, and it’s a patriotic duty to subsidize companies that have been abandoned by customers. I also think Locomobile is on the verge of a stunning comeback.
And I also think investors, lenders and suppliers are being taught a lesson to avoid insolvent companies that won’t deal with reality. But I shouldn’t say that too loudly; people might think I’m crazy.
I’ve said it before on this board somewhere but there needs to be a major change in corporate governance rules to get management back to the task of making decisions that result in better products and services from the company instead of spending time figuring out new ways to get ever more money for themselves from the company.
I’m seeing this happen right now at a local not-for-profit ( I don’t work there but know somebody who does); it’s no longer relegated to the land of big business. New CEO demands same salary plus extra perks as the departed CEO, and the board gives it to him. The not-for-profit proceeds to continue its descent into the red and the CEO asks for a raise while showing how well they are doing in pledged donations versus the actual donations which are always much less (irregular accounting procedures, anyone?). He gets the raise, and things get worse to the point where he can no longer hide it. He then fires some people and is now asking for another raise and increased benefits because he is doing such a fine job in these troubled times. Through all of this no other officers or employees have received a raise because the orginization can not afford it. Oh and after the former CEO was fired, the orginization ran for several months under the direction of the COO and CFO, but the board couldn’t promote either one to CEO because “the orginization couldn’t afford to give a raise with the new position” (and neither wanted the job without the raise). These pied pipers of the boardroom exist at all levels, and everyone seems to be asleep at the wheel.
The fact remains that a number of respected law professors and financiers including financial supporters of Obama have said that the treatment of senior and secured creditors in the Chrysler bankruptcy were highly irregular and could jeopardize investments. You can pound on the table all you want but the fact remains that senior secured creditors were screwed in favor of the UAW because Obama was able to pressure enough of the creditors who were TARP recipients to cave.
The actual facts of the case have been shown numerous times before. I’ve issued the challenge to product legal details, and I’ve received exactly one taker thus far:
https://www.thetruthaboutcars.com/more-to-love-about-the-chrysler-asset-sale/
Suffice to say, the challenger did not fare well.
Perhaps you can find someone who actually bothered to find out what kind of bankruptcy the d2 are going through. Personally, I only find it a bit curious that the conspiracy theorists can still find the gall to make accusations after the intellectual beatdowns they’ve been on the receiving end of.
buyers of “old GM” cars should not be warned they’ll have no legal protections,
Their legal rights are exactly as they’ve always been. But now they going to have to fighting for cash against the owners of old GM (Saviors of Capitalism no doubt in the mind of the business-knowledge challenged). Perhaps those guys (Heros of the Right) are going to be more generous than the taxpayer, but I wouldn’t count on it.
It all makes statements like these super hilarious:
Take care of the lawyers and the unions.
“Take care of” must mean screw in their special vocabulary. People realize that the lawyers are pissed they’re stuck with the old company, right?