Judge Arthur Gonzalez has approved Chrysler’s asset sale to Fiat, reports CNN Money, moving Chrysler closer to emerging from bankruptcy. Is it a coincidence that we are learning that the ChryCo bankruptcy is going swimmingly on the very day that General Motors files for bankruptcy protection? Probably not. It’s highly likely that everyone involved wants there to be only one automaker in Chapter 11 by the time a fresh batch of congressional hearings on the bailout (that was incidentally inspired by the fear of multiple, cascading auto-sector bankruptcies) roll around on Wednesday. Because nobody likes to look that foolish.
“Today,” writes GM CEO Fritz Henderson at his firm’s Fastlane Blog, “marks a defining moment in the history of General Motors.” And it’s true. GM has literally been skidding towards this day for decades. And though June 1, 2009 should have come years ago, it seems that there’s one possible benefit to its long, expensive delay. In this blog-driven year, GM knows that it can’t expect public largess without giving up some corporate privacy. That, or as a publicly-owned institution, GM is now subject to the Freedom Of Information Act. Either way, our tens of billions of tax dollars have bought American taxpayers an opportunity. An opportunity to webchat. Again.
Thanks to our main man, Justin, for providing these documents. History buffs may want to save a copy of this, General Motors’ C11 filing. Beyond that, here’s a list of GM’s assets. Needless to say, after 83 years on the New York Stock Exchange, GM has now been de-listed. “The parlous state of GM has left us with no choice but to remove it from the Dow,” said Robert Thomson, managing editor of the Wall Street Journal and editor-in-chief for all of Dow Jones. “A bankruptcy filing immediately disqualifies a stock regardless of a company’s history or its role as a cultural icon.” Parlous. How quaint. Anyway, Cisco Systems Inc. has replaced the automaker on the Dow 30 Industrial Average, which also punted Citigroup (which will be replaced by former division Travelers).
Maximum props to TTAC editor Jeff Puthuff for putting this document together. [Click here for pdf] I thank Jeff and all the other TTAC editors and writers for their contributions to our coverage of the U.S. and international automobile industry during the last four years plus. And thanks to all the TTAC commentators who added their two cents to these and other posts, keeping us honest, testing the strength of our intellect. No matter how this auto industry shake-out shakes out, rest assured that TTAC will continue to follow the story with the same no-holds-barred dedication to telling the truth about cars, and those who make them.
General Motors has filed for federal Chapter 11 protection. Official papers filed in Lower Manhattan court at 7:57 AM list $82.3 billion in assets vs. $172.8 billion in debts. The bankrupt automaker’s largest creditors are the Wilmington Trust Company ($22.8 billion in debts) and the United Auto Workers ($20.6 billion in employee obligations). Judge Robert E. Gerber has been assigned the case. The President of the United States will address General Motors’ insolvency in an official announcement later today. Meanwhile, a Rasmussen poll [via the Detroit Free Press] reveals that only 21 percent of likely voters support government aid to GM. Some 67 percent oppose the Obama administration’s plan to bless the troubled automaker with $50 billion (in total) in exchange for a 70 percent ownership stake in the reconstituted company. “Given a choice between providing government funding for GM or letting it go out of business, most of the respondents (56%) said it would be better to let GM go out of business.”
Here’s a no-no: Michael Moore’s open letter, on this day of GM’s bankrupty, in its entirety, via the Daily Kos.
I write this on the morning of the end of the once-mighty General Motors. By high noon, the President of the United States will have made it official: General Motors, as we know it, has been totaled.
As I sit here in GM’s birthplace, Flint, Michigan, I am surrounded by friends and family who are filled with anxiety about what will happen to them and to the town. Forty percent of the homes and businesses in the city have been abandoned. Imagine what it would be like if you lived in a city where almost every other house is empty. What would be your state of mind?
Was there ever any doubt, really? If there was, it’s gone now, as Bloomberg reports that the German government has decided to put its taxpayers’ money behind a Magna-owned Opel. German Finance Minister Peer Steinbrueck told reporters in Berlin that Germany will provide a $2.1 billion “bridge loan” (direct translation) to keep Opel alive. “A solution has been found to keep Opel in operation,” Steinbrueck said. “You can be sure that we didn’t take the decision lightly. All the federal and state representatives are aware that there are some risks.” And there I was thinking understatement was an English thing.
Around? Talk about precision engineering . . . Official press release:
Detroit, Mich: (NYSE: GM) – General Motors President and CEO Fritz Henderson will host a press conference on Monday, June 1. The conference will be around mid-day at the GM Building, 767 Fifth Avenue, in New York. We expect to provide a final time, satellite feed, conference call number, and other details in a subsequent Media Advisory early Monday morning.
And going, it seems. As many as 450 dealerships with franchise agreements coming due in the next 17 months will be dropped by GM, according to Automotive News [sub]. GM’s Mark LaNeve insists that “less than half” of the 450 number is more accurate, but admits that cuts will be announced when GM files for bankruptcy on Monday. “These are dealers who have very specific issues,” LaNeve tells AN. GM will be using “very similar” criteria for these cuts as the last round, when 1,124 dealers went to the big closeout sale in the sky.
Apparently no good deed goes unpunished in Auburn Hills, as Reuters reports that Lee Iacocca will lose his retirement benefits under Chrysler’s bankruptcy reorganization. The man credited with saving Chrysler from bankruptcy in 1979 will lose all of his supplemental executive retirement plan (SERP) benefits and his lifetime use of a company car, according to CEO Bob Nardelli’s testimony before Chrysler’s bankruptcy court. Although Chrysler’s employee FAQ states that “SERP contributions are placed in a trust fund and are not subject to creditors in the event of bankruptcy,” it seems that applies only to tax-qualified contributions. “We are required by law to stop the payments of non-tax qualified SERP benefits,” the FAQ reveals. Clearly Iacocca’s benefits fall into this category. Time to make another ad with Snoop Dogg?
The marathon meeting at the Adlon may not have been for naught after all. “After hours of talks with Canadian auto parts supplier Magna International, GM has reached an agreement, in principle, ” Reuters reports. Now they have to agree on a memorandum of understanding that will serve as the basis for bridge financing of €1.5 billion ($2.1 billion) and the trustee plan that comes with it. The German government will not give the bridge financing without the trustee scheme. Otherwise, their money and Opel will be drawn into the black hole of the Chapter 11 filing that is expected for Monday. Read More >
Sent to us from a member of our Best and Brightest, who’s been following former GM parts maker, and bankruptcy-stuck, Delphi’s implosion at an unsafe distance:
One bit of news last night, and two old known facts, that may be the tip of something bigger. 1. As expected, yesterday, Judge Drain extended the hearing on Delphi’s emergence plan until Tuesday, the day after the GM C11 2. The PTFOA [Presidential Task Force on Automobiles] has never said, and still won’t say, what price they are paying for the five US Delphi plants. 3 Platinum Equity has been sticking their nose in here [Delphi] trying to get to FMV for Delphi’s stuff. The first two on this list don’t make sense. The Platinum thing does. Here’s what could be going on . . .
Suspense in Berlin runs high. At 2 p.m., a meeting was held, German politicians only, no bidders, no GM, no treasury staffers. Fifteen minutes later, Chancellor Angela Merkel left the building—Opel watchers saw that as a sign of a final breakdown. Then at 3 p.m., GM and Magna show up at the Chancellory. Fifteen minutes later, Angela returns. At least they are still talking. 3:55 p.m.: The summit has been re-scheduled. Will start at 6 p.m.. It will be a long Friday night again in Berlin. If talks break down, it will be lights out in Rüsselsheim . . . Read More >
Define “soon.” Unfortunately, no one in federal bankruptcy court nailed that one down as Alfredo Altavilla, Fiat’s head of business development and future Chrysler board member, somehow managed to avoid the kiss of death. This despite Altavilla’s admission that the zombie automaker might not start making automobiles for an indeterminate amount of time. You know, given that the Chrysler dealers who didn’t take a bullet to the head have some 300,000 units sitting on their lots. Of course, it might help to know which units, their age and configuration. But the ChryCo bailout isn’t about selling cars, apparently. According to the Detroit News, all eyes were on soon-to-be-ex-CEO Robert “Run ‘Em Into the Ground” Nardelli. The failed former Home Depot despot “surprised a packed courtroom” when he testified that the whole “new Chrysler” thing’s a done deal, by close of play today [Friday]. The only real surprise: that someone would be surprised that Nardelli is happy to admit that the fix is in. ‘Cause the fix is in. Hang on . . . define “fix.”
Automotive News [AN, sub] bears the glad tidings that the Presidential Task Force on Automobiles (PTFOA) has decided how much of your hard-earned money they want to plow into “new” GM: $30 billion. For now. Here’s the deal [as laid down in today’s 8-K SEC filing]: “the $30 billion federal loan would be converted to equity, with $8 billion of the total U.S. funds to be repaid by GM, the officials said. Most of the rest would be converted to equity, with the government initially holding a 72.5 percent stake in the new company. That portion could be reduced to 55 percent if a UAW trust fund and bondholders exercise warrants.” So how much is this boondoggle going to cost me, really?
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