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Did you get the point that the UAW benefits trust and bondholders held unsecured claims of equal rank,
Equal rank? Under Chapter 11 all creditors are not created equal. So, unequal in fact that in to earn a seat on the creditors committee one must be among the entities owed, and it is this committee which can approve of disapprove any restructuring plan without the consent of all lesser creditors! The credit committee trustees that oversaw the restructuring was made of 15 entities who held 54% of GM's debt. Among those who earned that right was the United Auto Workers.
Now, I shouldn't have to point this out, but I will, in addition to earning a seat on the creditors committee, the UAW held a bit more economic power in the restructuring than most if not all creditors, they build the damned product! Without workers, cars don't get built and without cars getting built any possibility of recouping any money out a restructured GM would have pretty much been damned impossible!
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'the UAW entity will recover 100% of its claim and unsecured bondholders will get only 35%? The difference works out to $7 billion in total, of which $5,500 is my share. That is a rip-off.
Now who sounds like a socialist? I always been told by pro-business advocates that it isn't the business of businesses to be fair, it is to make a profit. And, I have always been told that those with the most economic power get. All's fair in love, war, and corporate takeovers. Those who weren't owed enough to be one the credit committee should be happy that they are getting far more than they would have ever dreamed of getting had GM gone into a Chapter 7 proceeding.
bravo sierra!! gm and chrysler both filed for chapter 11 reorganization. had the government not stepped in both companies would ahve gone through the bankruptcy process, and in the mean time the assembly lines would have remained up and running, cars would still have been delivered, etc. all that would have happened is that the debts would be set aside to be paid off over time as the company had the money to pay those debts. the bond holders would have gotten their money in the end.
As I have repeatedly, and futilely pointed out, GM would have never gone through Chapter II without the government intercession. GM would have been forced into Chapter 7 and not a car would have moved through any assembly line, because the whatever was sellable would have been sold through liquidation!
The OP's opinion as to who has the clout in things political shows the bias toward capital over labor. To expect that the law will see the laboring of thousands of workers as a smaller contribution than that of a faceless corporation (that "builds factories") and their counterparts in the investment world is another example of what went wrong in the thinking of those who favor a "natural" elevation of money over people. The notion that investors have any rights at all is going against the very principle of free market capitalism being a high risk construct that draws on the casino like nature of it's centerpiece, risk.......
On the contrary, no bias at all. One is free to sell one's labor to whomever it wishes, wherever it wishes, on mutually agreeable terms. Capital provided by the employer boosts labor productivity and incomes: how valuable would employees of the overnight delivery company be, if all they had were wagons and hand-carts? The trucks and airplanes and sorting facilities are capital used to improve the lot of everyone involved, including labor. For another example, imagine building automobiles out in the middle of an empty field.
The capital is provided under contract and law that guarantee certain rights. Capital, being as free as labor to be employed wherever it desires under mutually agreeable terms, goes where it can do the most good.
In the auto industry cases, the rules were changed. Labor received its paychecks and benefits, capital received its agreed-upon returns, and both were left with equally ranking unresolved claims which were above the ability of the employer to repay. The stink arises from the subordination of capital's claims when they should have ranked equally.
To allege that labor's interests (in the auto case) should be elevated above capital's rights instead of ranking equally, after labor took out hundreds of billions of dollars in above-market wages over the years before insolvency, is a little grating.
In the real world, property rights and the rule of law is positively correlated with worker incomes, national productivity and wealth. The 2009-2010 economic experience of the United States shows that when the rights of capital are attacked, employment and capital investment go down and workers suffer.
Labor earns and deserves its paychecks; capital deserves the customary protection of the rule of law. If you disrupt the dynamic, you eat the goose that lays golden eggs.
As I have repeatedly, and futilely pointed out, GM would have never gone through Chapter II without the government intercession. GM would have been forced into Chapter 7 and not a car would have moved through any assembly line, because the whatever was sellable would have been sold through liquidation!
again, not true. yes gm's assets would have been put up for sale if they had to go through chapter 7, but during that time the business would still have been open as they would have been in receivership while the assets were sold off, same with chrysler. in the end what would have happened is that chevrolet would have been sold to another company, same with all the other gm brands, and trademarks. who knows honda may have ended up buying buick, and toyota may have bought chevrolet. my point is that these companies would still have been making cars while in receivership. liquidation does not mean that a company ends completely, it means that someone is going to get a real steal if they can come up with enough money. the only time a business in chapter 7 bankruptcy is closed completely is when no one wants to buy the assets to run the company.
chances are that hummer, and saturn would have still gone away, but the others would still be around. in fact very likely gm of europe would have bought parts of gm of north america, and holden would have bought other parts, and perhaps some chinese manufacturer would have bought buick and maybe even hummer.
case in point, remember packard? they were going down in the early 50's. studebaker came along and bought packard, and ran the company for a few years before packard was finally killed off by general electric who had bought studebaker. as for studebaker, the only reason they were closed down is because GE felt they were not making enough money to stay open.
another case in point, willys. they built most of the jeeps used by the military, ford also built jeeps during WW ll. willys eventually went into receivership, and that company was bought by AMC, at the time known as rambler. AMC revived the jeep brand and it went on to not only sell many vehicles, it actually saved AMC. even after renualt disolved their partnership in the early 80's, and then chrysler bought amc to get the keep brand.
chapter 7 is not the end of a business, it can be a new beginning.
Now, I shouldn't have to point this out, but I will, in addition to earning a seat on the creditors committee, the UAW held a bit more economic power in the restructuring than most if not all creditors, they build the damned product! Without workers, cars don't get built and without cars getting built any possibility of recouping any money out a restructured GM would have pretty much been damned impossible!
Ah, there's the rub! Workers were very plentiful. They would have lined up ten wide and a mile long for $15/hour, non-union jobs for the new owners of the auto plants.
The UAW's power arose from its special relationship with the President of the United States, not for any economic reason. The UAW was non-essential, although workers are extrremely important as you note.
again, not true. yes gm's assets would have been put up for sale if they had to go through chapter 7, but during that time the business would still have been open as they would have been in receivership while the assets were sold off,
Utter nonsense! GM is was down to some $15 billion in cash on hand with monthly operating costs of 10$ billion, so how many months do you think cars were going to running off the assembly and for what purpose, since who in the hell is going to buy a car from a company that won't be able to honor its warranty of provide parts.
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in the end what would have happened is that chevrolet would have been sold to another company,
Who? Who was lined up to buy any of GM's brand? The government barely got Fiat to buy Chrysler!!!
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who knows honda may have ended up buying buick, and toyota may have bought chevrolet.
Well one thing we know for sure, you don't, because no boby, saw anybody who would purchase any part of GM especially in the middle of the sharpest decline in auto sales and financing in decades.
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the only time a business in chapter 7 bankruptcy is closed completely is when no one wants to buy the assets to run the company.
Do you think that businesses the size of GM operate on some imaginary Chapter 7 credit card that keeps the lights? They are in Chapter 7 because they no longer have the operating capital to stay open!!!
Bankruptcy, abrogate an existing collective bargaining agreement, but it doesn't act to decertify the union as the workers collective bargaining agent. So, if you think for a second that a very bitter period of bargaining wasn't in the cards with the all that goes along with such negotiations you have another think coming especially considering the massive concessions the UAW granted GM in the last round of negotiations. Had there not been a restructuring agreement that the UAW could have lived with, a car would not have moved across a single GM plant floor.
As for the Obama, UAW relationship, the investors ought to thank their lucky stars that it existed to begin with because it might have been far more difficult to have gotten the UAW on board without it.
Utter nonsense! GM is was down to some $15 billion in cash on hand with monthly operating costs of 10$ billion, so how many months do you think cars were going to running off the assembly and for what purpose, since who in the hell is going to buy a car from a company that won't be able to honor its warranty of provide parts.
you would be surprised at how many people would buy a car even without a warranty. again look at studebaker, checker, and other companies that went out of business, and sold off the last of their new cars despite the fact that people knew they were going out of business.
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Who? Who was lined up to buy any of GM's brand? The government barely got Fiat to buy Chrysler!!!
how about the chinese? they were in talks to buy hummer and saab. the only reason they didnt buy both companies is because gm and the chinese company looking to buy both companies could not agree on price and a few other details. as for chrysler, fiat did NOT buy chrysler, the government GAVE them equity in the company. in fact the government and the uaw both still hold something like 80% ownership of chrysler. fiat is just running the company for now.
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Well one thing we know for sure, you don't, because no boby, saw anybody who would purchase any part of GM especially in the middle of the sharpest decline in auto sales and financing in decades.
really? as i indicated above it was details that thwarted the sale of hummer and saab to a chinese automaker, and saab eventually went to a chinese automaker. ford sold off jaguar, aston martin, and land rover in a tough economy. do you really think that gm or the courts could not have sold off gm in parts? get real.
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Do you think that businesses the size of GM operate on some imaginary Chapter 7 credit card that keeps the lights? They are in Chapter 7 because they no longer have the operating capital to stay open!!!
In done, this is just too stupid.
many businesses stay open in chapter 7 bankruptcy. remember the courts appoint a receiver to keep the company running as long as possible while the assets are sold off. there are companies that make money running bankrupt companies for the courts. and like i said before, it was only gm of north america that filed bankruptcy, holden and gm of europe both would quite likely have bought the assets they wanted, and gm of north america would have emerged from bankruptcy in a different form.
you would be surprised at how many people would buy a car even without a warranty.
Not only would I be surprised but so would GM who even with a warranty posted a $30 billion loss just prior to entering bankruptcy.
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how about the chinese? they were in talks to buy hummer and saab. the only reason they didnt buy both companies is because gm and the chinese company looking to buy both companies could not agree on price and a few other details.
Few details: like the Chinese government said, no? Either way, can we discuss this topic on the facts and not your supposition, conjecture and just plain old wishful thinking? The fact is there were no buyers for GM, parts of GM or anything involving GM. No bought Hummer, No one bought Pontiac, and one has bought Saturn. Next?
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fiat did NOT buy chrysler, the government GAVE them equity in the company. in fact the government and the uaw both still hold something like 80% ownership of chrysler. fiat is just running the company for now.
Fiat wrote a check for $2 billion dollars for 20 stake which will rise to 35%. The U.S. government hold 8%, Canada 2% and 55% equity share to VEBA.
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saab eventually went to a chinese automaker.
Saab was purchased by the Dutch firm Spyker Cars N.V.
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jaguar, aston martin, and land rover in a tough economy.
All three exceedingly profitable brands, but totally besides the point since none of the above were GM cars which is one reason that Ford was in a better position even though they labored under the same labor management agreements.
In short, they were GM, and as I pointed out above, three different GM brands DID go completely out of business without a buyer in sight.
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many businesses stay open in chapter 7 bankruptcy. remember the courts appoint a receiver to keep the company running as long as possible while the assets are sold off. there are companies that make money running bankrupt companies for the courts. and like i said before, it was only gm of north america that filed bankruptcy, holden and gm of europe both would quite likely have bought the assets they wanted, and gm of north america would have emerged from bankruptcy in a different form.
I repeat: can we discuss this topic on the facts and not your supposition, conjecture and just plain old wishful thinking? Or as my grandmother would have said, the "coulda, woulda, shudda."
Saab was purchased by the Dutch firm Spyker Cars N.V.
you are right, geely bought volvo.
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All three exceedingly profitable brands, but totally besides the point since none of the above were GM cars which is one reason that Ford was in a better position even though they labored under the same labor management agreements.
sorry to disappoint you but at the time aston martin and jaguar were losing money when ford sold them, and if land rover was making money, it was doing so barely. all three companies were a drain on ford, which is why they were sold.
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In short, they were GM, and as I pointed out above, three different GM brands DID go completely out of business without a buyer in sight.
pontiac was gone before the financial crisis hit, as was oldsmobile, due to poor sales. as for hummer, there was a chinese company that was trying to buy hummer, but the chinese government would not approve the sale. read more here;
I repeat: can we discuss this topic on the facts and not your supposition, conjecture and just plain old wishful thinking? Or as my grandmother would have said, the "coulda, woulda, shudda."
i dont make suppositions with news in the auto industry, i actually do my homework. for instance when many people were saying ford was going to collapse, i knew they wouldnt because of their history, and because i saw what mulally was doing to get the company through the hard times. i also knew that mulally had a reputation of saving companies from the brink and making them profitable. he did it with boeing who was in even worse shape when he took over there than ford was when he took the reins. i also pointed that many times in fords history they were on the brink of collapse, and turned the company around in a big way. start with 1931 when ford was dying, and out came the 1932 model cars and that wonderful flat head V8. ford sales soared. and again in 1941 right after the pearl harbor attack. henry was removed by the government and his grandson edsel was put in charge, and then again in 1948 ford was again on the brink, and out came the 1949 ford which again saved the company.
and again in 1959 when ford brought out the 1960 falcon, and in 1964 when ford brought out the 1965 mustang, and again with the 1978 fairmont, the 1986 taurus, the 1997 F150, the 2009 fusion, and 2010 focus, 2010 taurus, and mustang, etc.
i missed fiat actually paying money for their stake in chrysler though, but even then fiat had an interest in buying chrysler as far back as 1990, so that deal was nothing new, and fiat was also interested in buying chrysler if a deal could have been reached before chrysler went into bankruptcy. so as you can see there were in fact companies that were willing to buy the assets of gm and chrysler if they went into chapter 7 liquidation. these companies would have been bought in receivership for pennies on the dollar.
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