Honda Cars : 'New GM' to emerge from bankruptcy | 2013 New Honda Car Reviews 0

Ailing automaker seeks court protection today
June 01, 2009 Tony Van Alphen
BUSINESS REPORTER

Canadian taxpayers will provide reeling General Motors Corp. with $9.5 billion (U.S.) in aid and take a 12 per cent stake in the once mighty automaker, which will seek court protection from creditors today.

In the biggest corporate rescue package in Canadian history, Prime Minister Stephen Harper and Ontario Premier Dalton McGuinty will announce in Toronto this afternoon the repayable loan and what taxpayers will get in preferred and common stock under a restructuring plan to save the automaker and turn it into the "New GM."

GM, once the biggest company in the world, will file for court protection under Chapter 11 of the U.S. Bankruptcy Code in New York but it hopes to emerge in 60 to 90 days. It is not clear if GM of Canada Ltd. will file for protection here.

Protection in the U.S. will be automatic. A judge will decide during the 90 days who all the creditors are and will resolve disputes about how much holdout GM bondholders will get for their debt, payments to other creditors and expenditures by the company.

Under the plan, the money from both governments will be used during the bankruptcy process and subsequent transition into a healthy company.

U.S. President Barack Obama will announce about $30.1 billion in extra loans for the company. In return, American taxpayers will get $8.8 billion in debt and a 60 per cent interest in the company. In addition to its 12 per cent stake in the company, the Canadian government will get $1.7 billion in debt.

There will be a new GM board with a minority of existing directors and a majority of new members, including one from Canada.

Obama and Harper will emphasize at separate news conferences that the aid should put GM on sound financial footing with a viable plan that takes into account conservative projections for the future of the industry.

They will also say there are no plans for further aid and it is their intent to sell government-held stock in GM as soon as appropriate.

"The government has no desire to own equity stakes in a company any longer than necessary," one U.S. official said last night.

The moves come after GM submitted a new restructuring plan to the governments with more concessions from stakeholders, additional plant closures and lower projections on sales and market share.

Under the North American government aid package, Ottawa and Ontario will contribute $9.5 billion or $10.58 billion (Canadian), far more than the $3 billion the two governments promised in December. At that time Harper acknowledged taxpayers would probably need to provide more help.

The U.S. has already pumped $19.4 billion (U.S.) into GM, whose sales have plunged in the past year.

Government leaders in both countries have said that allowing the collapse of GM and rival Chrysler would push the Canadian and U.S. economies into a much deeper recession and cost millions of jobs.

GM will announce 11 more plant closures and idle three operations as part of the restructuring. However, industry insiders say the moves will not affect Canadian operations.

Chrysler LLC, also surviving on a government lifeline, gained court protection in the U.S. last month and hopes to emerge within days in a partnership with Italian automaker Fiat SpA. Their Canadian subsidiary did not seek court protection.

GM has not indicated it will stop production in the U.S. or Canada during bankruptcy proceedings.

Source;
http://www.thestar.com/business/article/643419

Honda Cars : GM files for bankruptcy protection | 2013 New Honda Car Reviews 0

I guess we all saw this coming....
General Motors Corp. filed for bankruptcy protection in court in New York City on Monday, a move that will clear the way for a sweeping reshaping of the iconic company.

"The economic crisis has caused enormous disruption in the auto industry, but with it has come the opportunity for us to reinvent our business," said GM CEO Fritz Henderson.

"We are going to do it once and do it right. The court-supervised process we are pursuing provides us with powerful tools to accelerate and complete our reinvention, as well as strong safeguards for our customers and our business," he said in a written statement.

In its filing in U.S. Bankruptcy Court in the Southern District of New York, GM said it had $82.29 billion US in assets and $172.81 billion in liabilities as of the end of March.

GM will follow the template set by the rapid restructuring of Chrysler LLC. On Sunday night, a U.S. judge approved the sale of most of Chrysler's assets to Fiat. Chrysler entered government-sponsored bankruptcy protection in April and could re-emerge this week.

Canadian Auto Workers president Ken Lewenza said he would be "incredibly surprised" if all of GM's Canadian plants stayed open while the U.S. parent firm is in bankruptcy protection. A similar situation happened at Chrysler's Canadian plants in April.

In advance of the formal announcement from GM, a dealership — Chevrolet-Saturn of Harlem Inc. — filed for bankruptcy protection. The dealership's filing also said a new company — dubbed Auto Acquisition Corp. — will be created to form the "new GM." Auto Acquisition will acquire most of GM's assets as part of the revamp under creditor protection.

The filing confirms that Albert Koch will become GM's chief restructuring officer. He aided Kmart Corp. through its own reorganization under creditor protection.

U.S. President Barack Obama is expected to hold a news conference at the White House at 11:55 a.m. ET to address the bankruptcy announcement and outline the length of the process, which could last from 60 to 90 days in court.

Fritz Henderson, will speak in New York at 12:15 p.m. ET. Prime Minister Stephen Harper, Minister of Industry Tony Clement and Ontario Premier Dalton McGuinty will speak at 1 p.m. ET.

Administration officials told The Associated Press on Sunday the U.S. federal government will pump $30 billion US into GM as it makes its way through bankruptcy court. The automaker has already received $20 billion in government aid.

14 plants expected to close

The U.S. Treasury will get 60.8 per cent of the common equity of the new, revamped GM, while the Canadian and Ontario governments will take a 11.7 per cent stake in GM, and a United Auto Workers trust for health-care expenses would get 17.5 per cent, according to the reports.

Bondholders would receive a 10 per cent stake with the possibility of increasing their share to 25 per cent. Existing owners of GM's current common shares will likely get little, if anything, for their holdings, as often happens in similar situations.

GM also said it will speed up plans to cut 14 plants — which would reduce its number of assembly, powertrain and stamping plants from 47 in 2008 to 34 by the end of 2010 and 33 by 2012.

While none on the plants named on the list is in Canada, GM Canada has already said its hourly workforce will decline from 10,300 in 2008 to 4,400 in 2014. The GM Canada truck plant in Oshawa, Ont., recently ceased production.

If the restructuring process is successful, GM will emerge as a leaner company with a smaller work force, fewer plants and a trimmed dealership network. The company will move forward with four core brands — Chevrolet, Cadillac, Buick and GMC. GM is dropping its Pontiac brand, and looking to sell its Saturn, Saab and Hummer brands.

The bankruptcy represents a dramatic downfall for GM, which was founded in 1908 by William C. Durant, who brought several car companies under one roof, and developed a strategy of "a car for every purse and purpose.

Source;
http://www.cbc.ca/world/story/2009/06/01/gm-bankrutcy-filing.html

Honda Cars : Washington Post: U.S. to Steer GM Toward Bankruptcy | 2013 New Honda Car Reviews 0

Just a update on what's going on in GM land, this is a few days old but still relavant....
Filing Expected as Chrysler Set to Emerge.

By David Cho, Peter Whoriskey and Kendra MarrWashington Post Staff WritersFriday, May 22, 2009

The Obama administration is preparing to send General Motors into bankruptcy as early as the end of next week under a plan that would give the automaker tens of billions of dollars more in public financing as the company seeks to shrink and reemerge as a global competitor, sources familiar with the discussions said.

The move comes as the administration prepares to lift the nation's other faltering car company, Chrysler, from bankruptcy protection as soon as next week, industry sources said.

The shifts into and out of bankruptcy are landmarks in the Obama administration's attempt to broker a historic restructuring of the American auto industry in the space of months.

The legal tactic is viewed by some as the best means of reviving the companies. But the speed of the government-led transformation has triggered complaints that the rights of investors and dealers are being trampled. Meanwhile, fears that a bankruptcy could lead to cascading business failures are spreading throughout GM's vast chain of suppliers.

Under the GM draft bankruptcy plan, the company would receive just short of $30 billion in additional federal loans, a source said.

The figure is a starting point in negotiations between the government and the company, the source said, and could change. A cash injection that large would boost the U.S. investment in GM to nearly $45 billion. The timing of the filing is also fluid, and could happen the first week of June.
The government previously indicated that it planned to take at least 50 percent of the restructured company, and likely would take the right to name members to its board of directors, as it has at Chrysler, where the government will control four of nine seats.

The United Auto Workers retiree health fund is set to own as much as 39 percent of the restructured GM, in exchange for giving up its claim to at least $10 billion that the company owes it. Yesterday, the union announced that it reached an agreement with GM that will reduce the company's labor costs.

Still unknown is what part the Canadian government might play in the ongoing GM restructuring.

GM operates several plants north of the border. The Canadians agreed to invest about $3.5 billion in the Chrysler restructuring and control one of the nine board seats.

In the GM negotiations, the Canadians are poised to make a similar investment, but they are seeking assurances that the share of GM production in their country will remain the same.

"China isn't putting up the money, and Mexico isn't putting up the money," said Tony Clement, Canada's Minister of Industry. "But if we're putting up the money, just as the Americans are, then we have the right to protect our production capacity."

Clement added that the Canadian Auto Workers union would have to make more concessions before the government agrees to get involved in the GM rescue.

"We've basically been joined at the hip with U.S. Treasury on our approach with both Chrysler and GM," he said. "We have officials down here in Washington all the time. We basically review the information together. We devise strategy together and execute strategy together."

Both Chrysler and GM have been saddled with too much in debt and labor costs to compete against rivals from Japan and Korea, industry analysts say.

To alleviate the financial burdens, the Obama administration has engaged for months in negotiations with the union, dealers and creditors in hopes of reducing automaker costs without having to resort to bankruptcy court.

But last month, the administration concluded that the only way to free Chrysler of its debt was to file for Chapter 11, and it is now nearing a similar decision with GM.

The chief obstacle to an out-of-court settlement for GM remains: There has been no agreement between the company and the investors who hold $27 billion worth of GM bonds.

Under orders from the Obama administration, GM has offered to give the bondholders a 10 percent equity stake in the restructured company in exchange for giving up their bonds.
So far, however, the investors have resisted that proposal and if no accord is reached by June 1, GM will follow Chrysler into bankruptcy.

The speed with which the Chrysler bankruptcy has proceeded has given the administration more confidence that the best path for GM may be a similar trip, where the claims of disgruntled creditors and dealers can be more easily resolved.

In the Chrysler proceedings, the court has yet to stand in the way of plans to create a new company led by Italian carmaker Fiat. Chrysler's existing assets would be sold to the new company and the new entity could be up and running as soon as next week.

That's because Chrysler is asking U.S. Bankruptcy Judge Arthur Gonzalez to waive the customary 10-day waiting period before the order approving the sale becomes effective. The hearing on the sale is scheduled for next Wednesday at 10 a.m.

Gonzalez has already granted a similar request to expedite proceedings. Time and again in court, Chrysler executives and attorneys have argued -- and the court has agreed -- that Chrysler's core assets are "wasting" and that an immediate sale must take place to preserve value.

"Subject to the closing conditions, a new Chrysler could emerge as soon as the ink is dry on the judge's order," said Scott Van Meter, managing director of LECG, a consulting firm.

The administration is taking steps to prepare. It is drafting the paperwork for a $4.7 billion loan to sustain Chrysler after it emerges from bankruptcy. On Wednesday, the automaker announced that C. Robert Kidder, former chairman of Borden Chemical and of Duracell International will become the company's new chairman. He will succeed Robert L. Nardelli.

Chrysler still could encounter some delays. The company faces a new legal challenge from pension funds representing Indiana teachers and police officers as well as a state construction fund. The investors, who contend that the automaker's sale violates their rights as senior secured lenders to Chrysler, are seeking to move the bankruptcy proceedings to federal district court, which has authority over the bankruptcy court.

A hearing on the matter is scheduled in district court Tuesday.

There are also challenges outside court. Chrysler has moved to close 789 dealerships on June 9. But Sen. Kay Bailey Hutchison (R-Tex.) has introduced legislation that would withhold federal funding if the automaker does not give dealers an extra 60 days to close down operations and sell remaining inventory. Her amendment has won the backing of a number of other senators.

Judiciary Committee chairman Rep. John Conyers Jr. (D-Mich.) said he hopes to meet with White House officials today to discuss changing Chrysler's bankruptcy plan and GM's future.

Conyers did not outline what he wanted, but a nine-person panel he assembled for a hearing yesterday offered a hint. Liberal consumer advocate Ralph Nader, a conservative Heritage Foundation analyst and minority auto dealers all criticized the automakers' restructuring.
Conyers and other committee members attacked the administration for abusing bankruptcy laws, unfairly eliminating dealerships and jeopardizing consumer safety.

"GM now stands for Government Motors," said Rep. Lamar Smith (R-Tex.). "While the UAW is cashing in, it's the dealers, creditors and American taxpayers who are being forced to cash out."

Source;

http://www.washingtonpost.com/wp-dyn/content/article/2009/05/21/AR2009052104467.html?hpid=topnews

Honda Cars : General Motors to Close Roughly Half of its Canadian Dealerships | 2013 New Honda Car Reviews 0

R.I.P. Birchwood Pontiac Buick GMC. Wow, I never thought I'd see this day. I used to be a lot jockey and my dad had spent 25+yrs there. Sad day. My thoughts are with all of the families affected by this.
Following last Friday's announcement on the closure of 1,100 dealerships across the U.S. by fall 2010, General Motors is now telling approximately 42 percent of its Canadian dealers that they will lose their franchises next year. The U.S. automaker said that it has already started to notify some dealers sales and service agreements would not be renewed following expiry in October 2010. GM claimed in a prepared statement that the company's goal is to "accomplish this reduction in an orderly, cost-effective and customer-friendly way."

"Due to the unique aspects of our Canadian dealer network, we have focused our network rationalization efforts on key urban markets in an effort to achieve a viable network configuration all across Canada," GM said.

Source;
http://carscoop.blogspot.com/2009/05/general-motors-to-close-roughly-half-of.html

Honda Cars : GM registers brankruptcy domains | 2013 New Honda Car Reviews 0

With the emergence of two domain names GM has registered recently (gmrestructuring.com and gm-restructuring.com), it is becoming clearer that the carmaker is moving toward a filing of Chapter 11 bankruptcy protection before this month ends.

Although the sites are still empty, they are similar to the sites that Chrysler utilized to provide information since it filed Chapter 11 itself. If GM cannot restructure its bond debt, strengthen agreements with union workers and demonstrate that it can be viable before the government set deadline in June 1, then it will have to resort to a filing of Chapter 11 bankruptcy protection. It has been noted that chryslerrestructuring.com offers free access to particular court documents and other details of the proceedings. There is also a report that says the domain name gmfiat.com has also been registered last week in Italy. If there are any agreements between these two carmakers, it will be limited to the European operation of GM’s Opel and Vauxhall.

Source;
http://www.4wheelsnews.com/gm-registers-brankruptcy-domains/