Not that I would like to see the Camaro stop production for any period of time, or that I would ever wish for many Canadians to lose their jobs, but that would be a blessing if a flexline like that would be opened anywhere in the state of michigan.

 

Regardless as to what happens, it's looks all but certain that Camaro will likely cease production for a period of time.

If General Motors does file for bankruptcy June 1st, it's going to be patterned much like Chrysler. That means that all production at General Motors will halt till everything is pretty much settled. At Chrysler, now that the holdouts have been almost literally ran over, Chrysler will likely be back in business in 2 months or even less. Depending on how close GM gets to their goal for more federal loans, GM could take the same amount of time... but since GM's problems seem to be far more complex, I'd wager longer.


There is alot of posturing going on from Ken Lewenza. However, I feel he's painted himself into a corner in this case. By publicly stating that the CAW will not take any percentage of GM, and that they will not negotiate anything that has to do with retirees, I feel he has nowhere to go. GM doesn't have anything else to negotiate but a stake in the company. Like US taxpayers, the Canadian taxpayers aren't keen on bankrolling a car company, therefore like here in the US, the Canadian governments are forcing GM to jump through alot of hoops before they get additional money.

I can easily see the Camaro line being moved into the US if the CAW doesn't come around. But if GM Canada is liquidated, that opens up the Camaro to bidders, and I suspect GM North America will likely have to bid on it's Canada assets just like anyone else.

Like I said, there's the potential of a whole can of worms to be opened up.

 

Although you probably aren't going to believe this, but actually no.

General Motors has a much bigger risk of dissappearing than Chrysler at this point. Here's how.

The Auto Task force correctly (and unsurprisingly) identified Chrysler's lack of viability centered on their lack of small cars and quality mid size cars to weather them through sudden changes in fuel supplies. They also identified that Chrysler was too small to utilize the economies of scale to get better quality from suppliers at better prices. That's why the government mandated a tie-in with Fiat or another maker (as it turns out, something Chrysler has been trying to do since Cerberus took it over).

General Motor's problem, on the other hand, is massive, insurmountable debt that it will never be able to pay off and a multitude of divisions that diverted resources from keeping a smaller group of vehicles competitive. Put it this way, GM has a market value that is less than 1/50 of it's full & total debt to date.


While Chrysler overcame the small band of lenders who wanted to move Chrysler to liquidation, and with Fiat all but a done deal has nothing stopping them from emerging from court within a couple of months and resume production, General Motors is no way near there.... and they have far more debt (even adjusting for size differences between the 2).


While Chrysler had to do alot of dealing with debtholders (whose holdings were secured with Chrysler assets), GM seems likely to simply dump all debtholders (whose holdings were in bonds and stock that were not secured with any assets).

This means someone, or some group is going to file some lawsuits to recoup something. That means liquidation.

If one gets through and gets something, then there's the potential of whatever is left of the entire General Motors Corperation unraveling, and if anything surviving won't clear court till many months (or even years) into the future.

In short, as difficult as Chrysler's task was, it was a walk in the park on a sunny sunday afternoon next to what GM has to pull together.

It's doable, but between Chrysler and GM, GM is at bigger risk.

 

I wasn't aware that Chrysler stopped all production with the Chapter 11 filing.

 

They had plenty of excess un-sold cars. Stopping production really didn't hurt them.

 

I've been following the Chrysler deal really closely and I have to take issue with this. There was no small band of lenders who wanted to move them to Chapter 7. Nobody involved wanted liquidation because there's nobody out there willing to go out on a limb and buy even bits and pieces of Chrysler to make cars in this economy and if you're not gonna build cars there's no reason to own Chrysler or its components.

There were basically 5 groups involved.

1. Secured bondholders who took TARP funds that .gov could say do this or else
2. Secured bondholders who didn't take TARP funds
3. .GOV
4. A whole mass of unsecured creditors including the UAW
5. The current equity holders.

.GOV decided that it was gonna screw over Group 1 and 2 in favor of Group 4 (namely the UAW) in blatant violation of bankruptcy law. The secured bondholders were going to get a little over 28 cents of equity for every dollar they were owed while the UAW was going to get something like 80 cents of equity for every dollar they were owed. Group 1 couldn't do anything about that because of the TARP barrel the admin has them over, but group 2 can and did.

Bankruptcy law has a clear order of precedence that dictates who gets what out of a re-organized company. Everybody takes a haircut on what they lent including secured creditors but the equity in the new company is divided first amongst the secured creditors based upon what percentage of the total debt they're owed. Whatever is left would then go to the unsecured creditors divided by share of debt in order of precedence. After that, whatever is left, which is typically nothing, is divided amongst current equity holders...

If .gov continues to push through this travesty of law, and it looks like they will, they're signing not only the death warrant for Chrysler and GM but every other heavily unionized industry.

Once .gov screws the secured debt holders in favor of the politically popular UAW, no lender in their right mind will ever loan a heavily unionized company money at anything less than ruinous rates for fear the same thing will happen to them. Once they've set the precedent for ignoring the law in favor of a politically popular group, its going to carry forward and lenders are not stupid.

If this plan survives bankruptcy court as well as appellate court challenges, and there's no guarantee it will since it seems the creditors have a pretty clear case that the plan is an unconstitutional taking under the 5th amendment, I predict the complete death of the US auto industry in less than a decade...

As far as GM being more vulnerable to liquidation that Chrysler, I don't see it. Again, to liquidate, you have to find someone willing to buy and run a car company, and the creditors know there's nobody willing to do that right now and even if there was, I'm pretty sure the creditors realize that GM has an enterprise value that greater than what they'd get in liquidation. GM is a classic example of a financially failed company that once it emerged from Ch 11 could make money for the creditors that own it...

 

I agree with everything you say here.

The way the government is circumventing law, playing politics, and favoring one group while throwing others under the bus (all at taxpayer expense), is very, very dangerous. We all need to fully grasp the ramifications.

 

I can not agree with you here because the evidence clearly does not support your point....


What this small group of lenders was clearly doing was trying to get as much money out of Chrysler as they could by liquidating the company since they didn't get the feds to cough up more than the 2.5 billion that was offered.

They opposed additional loans from the feds to keep Chrysler going during bankruptcy proceedings.

They opposed Chrysler paying money owed to suppliers.

They opposed Chrysler's merger to Fiat, even though it clearly was in Chrysler's benefit.

They opposed a government payoff that over 70% of Chrysler investors jumped on... even when the offer was increased for the holdouts.

You're intitled to your opinion, and free to express an idea that isn't supported by anything but opinion.

However, in light of what has actually transpired in the courtroom, and what has actually played out, and what the traditional steps to bankruptcy based liquidation are (when a company's assets are worth more than the company, shut down all operations and sell off the pieces), based on facts, what you state is clearly opinion based.

I will give you this small consolation prize, though:

By going into bankruptcy, Chrysler's value as a company dropped like a ton of bricks while if they did not, the value of the company would have enabled them to get more for it's parts. What Chrysler did was an extremely smart BUSINESS move (not government... the government's role is in financing the thing) to save the company.... something Chrysler has become an expert at over the past 40 years.


As for the retirees...

While the UAW has been forced to swallow half of Chrysler to fund their future, Chrysler white collar retirees aren't as willing:

The fact still stands that the "holdouts" wanted to stop Chrysler's operations, and felt they could slow things down in court, fully aware that it would absolutely be fatal to Chrysler...

... and no, this isn't the President ramrodding something down someone's throat, or some so-called "Chicago Politics" at work.

This is a long time, highly respected, no-nonsense, New York bankruptcy judge that's presiding over the case....

.... which just so happens to have Chrysler, the UAW, and about 90% of Chrysler's debtholders and suppliers on one side.....

.... and less than 10% of holders on the other, fighting every step of the way:


Again... nothing I've read supports the notions that:

a) anything is being ramrodded through a large group of innocent investors.
b) anything is being done that is against bankruptcy laws beyond conceptional idealogy.
c) that this small group wanted anything but more taxpayer money or money from liquidation of the Chrysler Corperation.


We're going to see the exact same game play out next month with GM... and it's going to be far bloodier than what Chrysler's going through.

I really look forward to seeing how many of you looking at Chrysler's situation with so-called outrage will sit quietly, or go into denial mode when General Motors debtholders manuver to dissolve and liquidate General Motors.

I'll have the popcorn ready.

 

Makes me sick to my stomach to hear this information but I will believe it when I see. this is not what we need to hear if is not true. The 2010 Camaro gives some of us something to believe in I hate to hear negative
talk. That is just my opinion and as they say every one has one.

 

Thats kinda funny after what you say below.

Again, exactly who is going to buy Chrysler? Not once, anywhere have I seen even the wildest speculation that anybody is willing to put any money forward to buy any piece of Chrysler. Not since Cerberus got duped by Daimler into taking the Albatross from around their neck.

Because the .gov loans are loans that don't disappear after a reorganization. The more money that .gov loaned to Chrysler, the more under the thumb of .gov Chrysler was going to be, rather than being under the control of the senior debt holders...

So what? Bankruptcy law is pretty clear in saying that suppliers get paid to keep them afloat to keep the overall business going.

They're opposed to the Fiat merger because the plan to merge with Fiat is a violation of bankruptcy statute and case law. The current plan to sell to a "new Chrysler" bypasses the approval requirements inherent to Ch. 11 bankruptcy...

Here's a good series authored by a bankruptcy attorney describing the situation.

http://www.bankruptcylitigationblog....l-carnage.html



You don't seem to realize that the lenders you're talking about here, are debtors to the US gov't under the TARP program and subject to doing exactly what the treasury dept tells them. Remember Wagoner being forced out by .gov @ GM. He was made an example of .gov to make everybody else toe the line.

The articles you post make it very clear that's what has happened.


Again, funny you should say that given what you write below...

Again, for one that try's to label someone else's position as nothing but unbased opinion, you sure do it a lot yourself.

Since there's no market for car companies, car factories, or tooling for ****ty cars, how do you know what Chrysler is worth, either whole or in pieces?

The answer is you don't, you're going by what Chrysler, who is currently under de facto control of .gov, is saying. Which is 100% designed to make the case that the best thing for Chrysler is to screw the secured debt holders and give half the company to the UAW.

Here's a similar analysis from someone else much more qualified to speak on these matters than I am...

http://meganmcardle.theatlantic.com/

Again, as evidenced by Wagoner at GM, if .gov is funding you, .gov is in control.

And again, how do you know what the parts of Chrysler are worth. The answer is you don't...


The UAW hasn't been forced to swallow anything. I guarantee they're pushing for this hard behind closed doors because if this deal doesn't go through, they're not likely to get anything at all. Based on the outstanding debt, there would be very little equity stake left over for the unsecured creditors once the secured creditors got theirs...


Now why pray tell would they do that. Nobody is buying car companies or pieces of car companies right now so if Chrysler goes under completely, they'll likely get nothing.

Its been well demonstrated that that is exactly whats going on. Usurping longstanding bankruptcy law to screw secured creditors in favor of the UAW is exactly that.

One who's up for reappointment at the end of the year...

Chrysler: Currently under de facto control of .gov who are playing to the unions
90% of debtholders: Currently under de facto control of .gov who are playing to the unions
UAW: get the biggest recovery of money owed, quite obvious why they're on board.

Because they're secured bond holders getting screwed in blatant violation of bankruptcy statute and case law...

More importantly, they're funds that are part of individuals investment and retirement plans. They would be negligent and civilly liable if they didn't fight for their clients money...

The available evidence supports all three of those, whether you realize it or not.

 

Man I hit the post limit


Again and again and again with the liquidate. Please dear god in heaven, explain to me how you liquidate something that nobody wants. If I've got a nice flat screen TV, that I just so happen to have dropped so it doesn't work right anymore (GM/Chrysler) I can stick it on my front lawn with a price tag and try to liquidate it to get my money back all I want. If nobody is buying busted flat screens, it doesn't do a whole lot of good now does it?

GM in its current corporate state is an albatross around the neck that nobody wants. In the last 20 years, GM has destroyed somewhere in the range of $450 billion in capital with almost nothing to show for it and you're trying to make the case that there is somebody somewhere out there that wants to buy bits and pieces of GM to build cars? That's absolutely ludicrous on several levels.

Right here and right now, nobody with any business sense wants a car company and even if somebody did, they likely couldn't come up with the money for it because the credit markets are still so screwed up.

If someone did want them, they'd have been bought and stripped of the valuable parts a long time before they hit negative book value....

When GM files for Ch 11 come June 1, if .gov stays out of it, here's the list of what will happen...

1. Secured creditors will swap their debt for an equity stake at some rate less than 1/1.
2. Management will be gone.
3. Several brands will likely be immediately scrapped, leaving Chevy and Caddilac and maybe Buick
4. A bunch of dealers are gonna disappear
5. A bunch of plants are gonna close
6. The unsecured creditors will get pennies on the dollar in legal order of precedence
7. The current equity holders will be wiped out

IIRC I seem to remember you're an unabashed pro-union guy. That would explain why you didn't even attempt to address my point about how this screwing of secured bondholders is eventually going to be the death warrant for both GM and Chrysler and maybe even Ford and other heavily unionized companies...

 

just build the camaro in the USA

 

Here's some more good reading for anybody that cares about the facts of the law. David A. Skeel is a law professor @ U Penn with a focus in Bankruptcy law...

http://www.law.upenn.edu/cf/faculty/dskeel/

Here's the article with a few important excerpts...

Why the Chrysler Deal Would Horrify a New Dealer

This sounds kinda like the plan being forth for Chrysler...

Hey here he is saying exactly what I've been saying...

But what the hell does a guy with a JD who teaches bankruptcy law for a living know about the bankruptcy process and the proper way to go about it compared to guionM....

 

Moving the Camaro to the US, any US plant, would take another 2 years to retool.

 

That was kinda what I was thinking.

Man, this is very scary!