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Thread: GM bankruptcy may come as soon as next week

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    Vulture of The Western World Eric's Avatar
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    GM bankruptcy may come as soon as next week

    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."

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    Quote Originally Posted by Eric View Post

    "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."
    That is laughable. There is no way in hell that the Obama administration or the do nothing congress are going to protect production capacity. In fact, future GM vehicles will be built in China and sent to the United States. You can be assured that GM will not be manufacturing the volume of trucks as in the past, due to CAFE, so US based production will plummet as a result.

    Canada may do a better job of protecting their production capacity than we do. Canada has a real government that protects its workers as compared with ours.

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    Vulture of The Western World Eric's Avatar
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    Quote Originally Posted by swamprat View Post
    That is laughable. There is no way in hell that the Obama administration or the do nothing congress are going to protect production capacity. In fact, future GM vehicles will be built in China and sent to the United States. You can be assured that GM will not be manufacturing the volume of trucks as in the past, due to CAFE, so US based production will plummet as a result.

    Canada may do a better job of protecting their production capacity than we do. Canada has a real government that protects its workers as compared with ours.

    Yep - more BS lip service. I despise 'em all...

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