Some Facts in the GM Propaganda Race

Zero Hedge pointed out how abysmally hilarious CNBC's repetitive conclusion that GM's bankruptcy is a done deal, when you only have 20-35% of the bondholders on deck. True, Rattner will likely make some urgent phone calls, and attempt a gut (and wallet) wrenching appeal to the holdouts, referring to such flights of fancy as the holdout's mother, family, the IRS, the SEC, etc. But even all that does not preclude those who believe they stand a chance of getting a better recovery in liquidation than a 20% warrant upside in a company that has in the past made such utter horrors as the Aztek, in appealing to district and, eventually, supreme court.

In fact, ZH is quite confident that Mr. Lauria is currently contemplating just what the best overtures to the Supreme Court should be for both Chrysler and GM. Whatever these are, the fireworks will hopefully be interesting: luckily Sotomayor is still not up and running.

As for the facts, Dealscape has a great interview with Jeff Marwil of Proskauer who lays it out straight:

"It's not a deal if it's only 20% of the bondholders agree, and it doesn't mean the plan will succeed. It just means the government has support now from some bondholders, and bankruptcy now seems like a foregone conclusion," Marwil explained.

"I think the greatest challenge will be doing it right the first time and emerging from bankruptcy poised for success. Who knows how long the bondholders will fight? This will be the biggest bankruptcy ever so there are a lot of issues to get resolved," he said.

In other news, ZH has it Bowling Green spies reporting, and I hope to bring to our readers the moment when Gonzalez puts Peck to shame with the fastest steamrolling of the bankruptcy process in recorded history.

Comments

[Mister Jimmy:]

OK, the Aztek was a horror. But, this is the same company that also produces the popular Impala, hugely exciting new Camaro, market-share growing new Malibu, two (2) pick-up trucks that are tradesman favorites (Silverado and Sierra), the immensely popular Chevy Tahoe, the Suburban, and legendary Corvette. It's so typically one sided, and SO typically Seeking Alpha, to throw a failed product out there and imply that it defines the entire company.

May 28 05:17 PM

[Larus:]

I have read Alpha for a few months now
and find your information very one sided and biased
this is more journalist spewing than real information.

May 28 05:27 PM

[J. Crighton:]

A great comment regarding the Aztek from Mister Jimmy, but the Aztek really was a horror and deserving of unending shaming, much like the pinto, the yugo, and my first car: the Geo Metro (looked like a pregnant rollerskate).

Beyond that, I'm rooting for the bond holders and bankruptcy law.

May 28 05:28 PM

[Tori:]

Seeking Alpha is the worst, most biased publication on the internet.

May 28 06:15 PM

[banyon:]

This is an opinion piece, people. If you don't like it, then go read a different website or author.

I found it pretty informative, even though I think the Monday bankruptcy announcement is probably inevitable. I've been buying these $1 puts for a couple of weeks now.

May 28 07:48 PM

[Jasper M:]

I seem to remember some reporter at SA claiming that Judge Gonzalez was a stickler for proper application of bankruptcy law. But ever since the the opening concessions in the Chrysler action (prompted, as far as I can tell, by holdouts running low on $$), he is being painted as an Administration stooge. So far, this strikes me as unjustified.
But I am prepared to receive instruction from those with a clearer view of things. Anybody?

May 28 09:11 PM

[Alfredo Mar...:]

So basically the parties that HAVE to go along with this plan are on board. Such a victory! What about the other 70-80% of evil bondholders that rightfully want their first place in line to get paid in the event of bankruptcy? These people aren't just evil hedge funds, these are retirement accounts, pension plans, little old ladies, etc.

GM boldholders won't be as easily bullied as Chrysler's were, they're more spread out and diversified. Obama will once again try and shaft bondholders and give GM to the UAW, but I see a major fight brewing. Let's hope we're still a nation of laws and not of men.

May 28 09:12 PM

[Speedspirit:]

Federal government proposed to bailout GM's secured bank creditors—the biggest being J.P. Morgan Chase, Citigroup, and Credit Suisse—at the full face value of their loans. GM would deliberately be changed into a "lean, global" maker of small, fuel-efficient vehicles with its headquarters in the United States but most of its production operations in Asia and South America, major parts of it sold off quickly in the bankruptcy, and its bank creditors made whole. Get the picture and who is benefiting. Same story American taxpayer money going to British owned Bankers. Taking away the last bit of American productivity and enginering. Step by little step.

May 28 09:46 PM

[conceptwizard:]

Obamas new fuel targets will be a challenge along with making cars people want. Pick 6 models make them well and warranty them strong. They make a few models now that sell. Keep the prices down. I still believe the business model they have will be obsolete before they start. In order to compete on a world market you have to have wages competitive to the median. The wages & benefits here compared to other parts of the world are way higher. Ford & GM can build the same car at half the cost outside the country, they have been for some time. This is an attempt to maintain a dying business model by saving votes using taxpayers hard earned money. If they are going down this road they might as well throw out the competition via protectionism. At least that way we would be guaranteed our money back.

May 28 10:39 PM

[Jasper M:]

Concept (I can call you concept, right?)
New fuel standards don't come into effect until 2016. I understand that there is lead time required for redesign, but for the short turn, there is no immediate effect
And in the longer term, they may be repealed by 2016.

May 28 11:21 PM

[TeresaE:]

No one is taking into account the true losers of these bankruptcies.

The American suppliers, vendors and dealers.

GM & Chrysler's best customers

Fired.

And yet, they talk about "preparing for success"

bwaaaahaaaaahaaaaa

Who is going to be left to buy your overpriced junk? Now made both unsafe, crappier and MORE overpriced.

No customers = no sales = future next bankruptcy

Party on.

May 29 09:01 AM

[john s. gordon:]

so GM had azteks & vegas, & ford had pintos & edsels. nobody;s perfect, especially in (inbred) detroit.
> jack

May 29 09:13 AM

[Deweyp:]

Numbers I have seen show assembly labor costs at only 10% of the total for an auto built here in America. The greatest cost is involved in materials, engineering, marketing and distribution along with fixed factory costs. You cannot expect to get high quality assembly using workers who are paid less than they can earn at McDonalds or Walmart. The new contract with the UAW lowers wages and benefits to a competitive level with other manufacturing jobs in other US industries.
Actually the Aztek is a really nice vehicle but it didn't appeal to many folks because of styling. The same could be said of a few models from Honda and Toyota. I know folks who bought a new Aztek every year until the model was dropped. If you had ever driven one you would never compare it to a Pinto or Vega.


On May 28 10:39 PM conceptwizard wrote:

> Obamas new fuel targets will be a challenge along with making cars
> people want. Pick 6 models make them well and warranty them strong.
> They make a few models now that sell. Keep the prices down. I still
> believe the business model they have will be obsolete before they
> start. In order to compete on a world market you have to have wages
> competitive to the median. The wages & benefits here compared
> to other parts of the world are way higher. Ford & GM can build
> the same car at half the cost outside the country, they have been
> for some time. This is an attempt to maintain a dying business model
> by saving votes using taxpayers hard earned money. If they are going
> down this road they might as well throw out the competition via protectionism.
> At least that way we would be guaranteed our money back.

May 29 10:01 AM

[spald_fr:]

Mr. Gibbs: Does the president believe he makes better decisions than the his 43 white male predecessors because of his Afro-American experiences?

Follow up sir: Is the president’s judgement as a black male as good as an hispanic female?

-------------
On May 28 06:15 PM Tori wrote:

> Seeking Alpha is the worst, most biased publication on the internet.

May 29 05:40 PM

[Felix The Cat:]

Agreed that GM has had some stellar cars. But ultimately GM HAS failed. So Tyler's pointing out of the Aztec, which was just one of GM's many poor decisions is just reminding us that this company has 'baked' more losers than winners, while at the same time has made HUGE financial miscalculations...IE the UAW deals!!


On May 28 05:17 PM Mister Jimmy wrote:

> OK, the Aztek was a horror. But, this is the same company that also
> produces the popular Impala, hugely exciting new Camaro, market-share
> growing new Malibu, two (2) pick-up trucks that are tradesman favorites
> (Silverado and Sierra), the immensely popular Chevy Tahoe, the Suburban,
> and legendary Corvette. It's so typically one sided, and SO typically
> Seeking Alpha, to throw a failed product out there and imply that
> it defines the entire company.

May 29 05:41 PM

[nova:]

Can "a government motor" (a new GM) go out off business with all this government support? The answer is YES.

A new GM did not become viable just because our government ruined old GM investors & bondholders and infused billions of US$ into already failed business model: the same greedy and lazy unions having more influence on management decisions. Operations did not become any better.

As for the US government, printing tons of monopoly-money is a one-way ticket to its own bankruptcy.

May 29 06:22 PM

[banyon:]

I think you can include "taxpayers" with the true losers too since it appears to be more money going down the drain.


On May 29 09:01 AM TeresaE wrote:

> No one is taking into account the true losers of these bankruptcies.
>
>
> The American suppliers, vendors and dealers.
>
> GM & Chrysler's best customers
>
> Fired.
>
> And yet, they talk about "preparing for success"
>
> bwaaaahaaaaahaaaaa
>
> Who is going to be left to buy your overpriced junk? Now made both
> unsafe, crappier and MORE overpriced.
>
> No customers = no sales = future next bankruptcy
>
> Party on.

May 29 07:49 PM

[wheelbarrel...:]

You should be watching CNBC they will tell you what you want to hear - everything is wonderful and that you should be buying stocks so you don't miss the next bull market. You find realism here and the MSM isn't allowed to report that.


On May 28 05:27 PM Larus wrote:

> I have read Alpha for a few months now
> and find your information very one sided and biased
> this is more journalist spewing than real information.

May 30 12:51 AM