Sunday July 12, 2009

New GM exits bankruptcy after selling good assets

This article belongs to the GM, Ford and Chrysler bankruptcy watch story arc.

news.yahoo.com :

A new General Motors emerged from a whirlwind 40-day bankruptcy on Friday [10 Jul 2009] - far more quickly than most industry-watchers had expected. The US government has taken on substantial new risks with the US Treasury as 60% owner of the new GM. The new GM will have slashed its debt and healthcare obligations by $48 billion, dropped almost 40% of the dealer network and sold laggard brands such as Saab, Saturn and Hummer. The company's white-collar work force will be cut over 20%, eliminating 6,000 jobs. Executive ranks will be cut 35%.

Bankruptcy slashed GM's debt and healthcare obligations and brought down labor costs to be on par with Japanese competitors led by Toyota. Key assets and the Chevrolet, Cadillac, Buick and GMC brands form the new GM. Other assets, including shuttered factories, remain in bankruptcy for a liquidation process, to form Motors Liquidation Co, expected to stay in bankruptcy for years. The White House has disbursed almost $80 billion to shore up the auto industry. Chrysler exited bankruptcy a month ago by following an asset sale plan that gave operational control to Fiat.

- Who would have thought? That was pretty fast, seeing how bankruptcies usually drag for years. But with the full attention of the US government and millions of people all over the world watching closely, they had to do something, and they had to do it fast. I suspect there is still quite a story to be told. The liquidated assets. The stiffed stakeholders. The steamrolled bondholders.

Or perhaps that may just have been what GM needed. Perhaps with this move, it can now move ahead with American innovations such as the Chevrolet Volt, and crawl its way from the sewers, back to the top, and regain some of its former glory. We shall see.

See also :

1. Chrysler files for bankruptcy, enters Fiat deal
2. GM bankruptcy still likely despite plans to cut 23000 jobs, drop Pontiac brand
3. GM to file for bankruptcy on Mon 1 Jun 2009
4. GM files for bankruptcy, gets delisted from Dow Jones and NYSE

(2009-07-12 11:28:28 SGT) [Biz] Permalink

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