GM directors' options include bankruptcy filing, Wall Street Journal says

[Oracle of Delphi]

Richard Truett

Automotive News

November 22, 2008 - 12:23 am ET

General Motors directors are considering a Chapter 11 bankruptcy filing, the Wall Street Journal and Detroit television stations reported.

According to local TV reports, GM's board was meeting late Friday night in the company's downtown Detroit headquarters and had added court protection to the list of actions that may be taken as the company's cash supplies dwindle and the prospects for immediate federal aid dim.

The Journal attributed the information to people familiar with outside board members' thinking. The paper said such a move would put directors at odds with CEO Rick Wagoner, who has maintained that a Chapter 11 filing isn't feasible because consumers would shun vehicles made by a bankrupt company.

GM is burning through its cash reserves and is seeking government loans to stay solvent amid the weakest U.S. auto sales in 25 years.

Wagoner and the CEOs of Ford Motor Co. and Chrysler LLC appealed for help before the House and Senate this week. They now must submit plans by Dec. 2 to show how they would put any federal money to good use.

GM said Nov. 7 that its cash could fall below minimum amount needed to pay its bills within months.

The Journal said GM provided a statement saying the board had discussed bankruptcy but didn't view it as a ``viable solution to the company's liquidity problems.'' The paper also cited GM spokesman Tony Cervone saying management is considering everything possible to avoid a filing.

Link: http://www.autonews.com/apps/pbcs.dll/arti...paign_id=alerts

Edited November 22, 2008 by Pontiac Custom-S

[longtooth]

"GM said Nov. 7 that its cash could fall below minimum amount needed to pay its bills within months"...purposely vague. I suppose they're playing poker.

"Editorial: China Could Buy 433 General Motors With Their T Bills Alone"

excerpt from the article: "If I’d be GM, I’d be in Shanghai right now, negotiating the deal. Then I would go to Congress and say: What are you going to do about it?”

http://www.thetruthaboutcars.com/china-cou...-t-bills-alone/

GM: China's pocket-change 'investment'.

Edited November 22, 2008 by longtooth

[ellives]

Oh how far the mighty have fallen. I have my doubt the congress will actually get anything done on a bailout. I just don't think they're smart enough as a collective body to really understand the impact of losing the US auto industry. We as a country deserve what we get.

[gmcbob]

Wow, I'm totally on the edge of my seat. This is going to be one hum-dinger of a Holiday Season for the people working at the Big 3.

My "Spidey Senses" are usually pretty good, but I have no idea on this one.

If I were a betting man, (and I'm not), but, my bet would be that GM (and Ford and Chrysler) get their money from the Govt, avoiding a Ch 11 filing, but with huge strings attached (like Wagoner may have to not pay himself until the company shows a profit, etc, etc).

These board members and executives aren't as stupid as they seem, I think they all realize that filing for bankruptcy would be the kiss of death for their sales - and ultimately - for their company and their credibility. You thought a 45% drop in sales in October was bad, if they filed Ch 11, their sales would drop like 90% or something. The revenue stream would stop instantly. The only thing that could possibly save them at that point would be this bailout money from the Govt. , because from what I've read, it would be nearly impossible to get debtor in possession financing. A judge would come in and start selling off brands, factories, technology, etc, to anyone with cash. Your 2011 Volt would be wearing a Toyota badge on it (and of course everyone would think they were the ones that developed it).

Edited November 22, 2008 by gmcbob

[ellives]

Hell ya. Half the population of the US still things the big 3 quality sucks. I hear it spouted all the time. Campbell Brown said it again on CNN last week.

Even as it is, if they survive, after 5 years go by people will still be saying "I thought GM went bankrupt."

Wow, I'm totally on the edge of my seat. This is going to be one hum-dinger of a Holiday Season for the people working at the Big 3.

My "Spidey Senses" are usually pretty good, but I have no idea on this one.

If I were a betting man, (and I'm not), but, my bet would be that GM (and Ford and Chrysler) get their money from the Govt, avoiding a Ch 11 filing, but with huge strings attached (like Wagoner may have to not pay himself until the company shows a profit, etc, etc).

These board members and executives aren't as stupid as they seem, I think they all realize that filing for bankruptcy would be the kiss of death for their sales - and ultimately - for their company and their credibility. You thought a 45% drop in sales in October was bad, if they filed Ch 11, their sales would drop like 90% or something. The revenue stream would stop instantly. The only thing that could possibly save them at that point would be this bailout money from the Govt. , because from what I've read, it would be nearly impossible to get debtor in possession financing. A judge would come in and start selling off brands, factories, technology, etc, to anyone with cash. Your 2011 Volt would be wearing a Toyota badge on it (and of course everyone would think they were the ones that developed it).