Readers may recall that we’ve been of the view that the expedited bankruptcy planned for GM would run into more snags than its advocates assume. We have not felt as strongly on that point as far as Chrysler is concerned, since that deal has vastly fewer moving parts. Nevertheless, a hold-up on Chrysler illustrates the […]
Read more...Submitted by Edward Harrison of the site Credit Writedowns. We have just learned that Fiat has successfully completed its deal with Chrysler. This means that the bankrupt ‘Old Chrysler’ will now have far fewer cash and assets available for creditors and that it will be liquidated with large or total losses likely for creditors. Dissident […]
Read more...This is now getting interesting. Conventional wisdom among most bankruptcy commentors was that the objections to the Chrysler deal were not strong from a legal standpoint. Thus the fact that the Supreme Court has decided to stay the deal comes as a surprise, particularly to Team Obama, which has put its prestige and considerable muscle […]
Read more...The last person one might expect to criticize the Obama Administration bailout of GM is a unapologetic liberal like Robert Reich, labor secretary under Clinton. Yet he does precisely that in today’s Financial Times. And his logic is similar to the arguments made here and elsewhere against the bank rescue operations. Unlike some other commentators, […]
Read more...The New York Times discusses whether Americans will return to buying cars at the pre-bust level when conditions return to some level of normalcy. Of course, the subtext is that the US economy will get back on track later this year, when many those who anticipate growth starting 3Q/4Q, when pressed, say the recovery will […]
Read more...Submitted by Edward Harrison of the site Credit Writedowns. I was on the BBC yesterday talking autos and my commentary was almost entirely political. So, as we await the likely General Motors bankruptcy, I think it bears discussing how political this process has been and will continue to be. General Motors is a monster company […]
Read more...One of our oft repeated pet peeves has been that the effect of a bankruptcy filing on buyer appetite had not been assessed in the Chrysler or GM bankruptcy plans. We had argued it was vital to get a handle on it, since it would affect how much financing would be required in court and […]
Read more...We have for some time been concerned about the odds of a GM bankruptcy. While bankruptcy in theory offers some compelling advantages, GM is so large that only certain operations could be hived off. The thought, as with a traditional Chapter 11, is to skinny up the company and a have a new sleeker version […]
Read more...Having seen what Cerberus has done to one of its acquirees (New Page, a group of mills that produce coated paper), nothing should surprise me. But the way that Chrysler treated its dealers as stuffees, pressuring them take extra inventory and make extra investments in plant and facilities shortly before the dealerships were cancelled, is […]
Read more...Readers are probably well aware that Chrysler and GM have started the process of closing dealerships. Chrysler is shedding 789 of its 3200 dealers, and GM is excising 2600 of its 6246, with 1100 notified last week. UBS estimates that the total job losses could reach 160,000, although some dealers may be able to operate […]
Read more...It only takes opposition by 10% of the bondholders to stymie an out-of-court restructuring of GM. The FT believes that there are enough bondholders who, via being net short GM bonds via credit default swaps, have good reason to block a negotiated outcome and force the automaker into bankruptcy. And that poses risk to the […]
Read more...This post is from reader Gonzalo Lira. Although I beg to differ with him on a couple of his observations, it’s certainly colorful and thought provoking. I give my quibbles at the end. Insofar as this burgeoning Millennial Depression goes, I’ve noticed there are two sorts of people: Ones such as myself, obsessively following every […]
Read more...The New York Times reports that the Chrysler brinkmanship continues, with some small hedge funds acting as pigs in the hope of extracting yet more concessions from the government, as the bankruptcy deadline looms. The reason the funds can play such hardball is that the Administration does not want to BK Chrysler. Despite all the […]
Read more...The obstacle to a bailout of Chrysler is the still large bid and ask spread between what the secured creditors are now willing to agree to in the way of a haircut, versus what Treasury is willing to give them. The drop dead date is next Thursday. But news reports tonight differ on what a […]
Read more...We said at the beginning of April, when the idea of a “surgical” bankruptcy of GM and Chrylser was first mooted, that we assumed this was an effort at high stakes poker, because there was simply no way to make reality conform with the Administration’s fantasy. Readers may recall that the high concept was a […]
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