GM Bankruptcy Fees Could Reach $1.2 Billion, Top Lehman Brothers

Bloomberg:

Feb. 25 (Bloomberg) -- A General Motors Corp. bankruptcy might yield a $1.2 billion "bonanza" for bankers, accountants and lawyers, surpassing record fees being made by advisers on the collapse of Lehman Brothers Holdings Inc.

GM, trying to lower debt and wages out of court, said Dec. 2 it must slash $62 billion in liabilities by almost half, excluding government loans. Otherwise it may wind up like Lehman, which will pay an estimated $906 million in judge-approved charges for professional services, said Lynn LoPucki, who teaches bankruptcy law at the University of California, Los Angeles.

Read the whole story: Bloomberg

Comments

[steelmill]

How come anybody in the media is asking about that 130 billion that GE got.Now GE is still losing money.Is it because GE owns some of the media.

[steelmill]

For anyone interested,the Japanese government has been pouring money into there car companies for years.They figure it's cheaper than large layoffs,they seen it here and the results of large layoffs.

[huffnpuffn]

Oh what a wonderful time to be a bankruptcy attorney. Let the vultures finally feast on the carcass that once was GM.

[sc300nc]

And that would be money well spent. Give them the money Congress, let's get this bankruptcy on the road. This is the best way out, it will happen eventually, regardless of how much money gets pumped into this mess of a company.

[DLBSR]

Subsidizing auto companies isn't working, at least in it's present form. The problem as I see it is the current bailout initiative, currently over $20B and counting, did not structurally include the approval and participation of Main Street. We can nationalize these companies and restructure them to build the quality and high tech cars of the future while permitting the domestic auto makers to return to the world's market place as a competitor to be reckoned with. We can do all of this AND provide tax credits to purchasers of new vehicles AND return future earnings to Main Street to help pay for the many programs we are currently borrowing from China to pay for. The choices are ours to make, the consequences ours to share. We absolutely must get this right, we will not be granted another opportunity. Get onboard and take a test drive of an industry rescue initiative entitled Common Sense Rescue Plan For The Auto Industry @ http://taxpayercommonsense.blogspot.com where you will see a brief overview of the model. If you agree the model overview is a viable solution to saving this industry, email or call your senators and representatives and tell them to support the Commom Sense Rescue Plan For America's Auto Industry.

[LeonBNJ]

I worked in law firms for over 27 years. I have worked with Bankruptcy matters, I know the fees professionals get for their work is way out of line of reality and what they pay in salaries. No attorney or top financial consultant is worth $800 an hour nor a paralegal or basic auditor at $200 an hour and yet such payments can be approved by a bankruptcy court. If they got paid like real people, like those working on the assembly line, especially the partners rich and pay for fancy offices, the the fee applications would be more reasonable and with more monies available to the creditors.

[hopefull2008]

It is something that has to be seen to be believed the greed that surrounds a bankruptcy. Employees who are around pre and post filing get to see a company, on one hand, running out of money for weeks or months where even the most basic expenditures being questioned. Post bankruptcy they see and invasion of 'advisors' whose fees are enormous but more noteworthy are their expenses where 4 and 5 star hotels and restaurants are an everyday event. It is disgusting.

[ErnestineBass]

I'd like to know WHY Wagoner and Lutz are being ALLOWED to run GM into the ground?

Until those two and the entirety of GM's antiquated Board of Directors are booted to the curb, NOTHING will change.

NOTHING!

[jdmccl]

What about that joker at GE? Welch ran a great company and now there is feudalism and ideology gone to the top of interest over shareholder value.

[DLBSR]

The board of directors at GM would be radically reformed if the Common Sense Rescue Plan For The Auto Industry is adopted as the rescue vehicle :-) . The model suggests the board will be populated by representatives form all regions of the country, chosen by the voters at the polls on a two-year cycle with a two term limit for each board member.

[sposton]

And GDP will show this as a hopeful spike in economic activity. You'd never think that by going bankrupt we could improve our economic output. Why don't we all go bankrupt simultaneously? This would act as one colossal economic stimulus package. ;-)

[jsarets]

I hope that this helps the "let them fail capitalism rah rah" crowd understand that bankruptcy is a form of government intervention in the economy that can get prohibitively expensive to finance in a particularly big wave of "creative destruction".

Bankruptcy is a fraud in which government compensates investors who took risks on the bond market and lost. The investors messed up just as badly as the management, so it only makes sense to wipe them both out and call it even.

Capitalism is not a free market model, it's government intervention on behalf of investors, whereas socialism is government intervention on behalf of producers. These models work by suppressing market competition, promoting monopolies of capital and labor respectively.

Insolvent producers should be turned over to their employees to democratically elect new management and allocate shares of future profits among themselves. With no outstanding debt, the new partnership should be able to secure bank loans and chart a new course.

[KillTheMessenger]

Capitalism is simply the private ownership of the means to create wealth. If you own a pair of shoes and you use them to walk to work, you are a capitalist. Geez, people, stick to the definitions.

What you mean is that the US is a plutocracy and even a kleptocracy. Yes. Both are true. But the underlying ownership system, capitalism, will not change unless we go the way of Cambodia or North Korea.

[vedder110]

Don't forget the kibbutzim. Apparently there are some where you don't even 'own' the wristwatch on your arm.

[drymartini1]

Jsarets. Let me explain you how the ownership structure works.

At the top are the creditors (bondholders). If a company cant pay all its debt, and when it enters chapter 7 (not 11 because thats reorganization and a whole different issue).

The senior creditors (not by age ha ha but by claims) get paid first. then subordinated creditors.­..etc etc.

Then there are suppliers and also employee unpaid paychecks etc.

After everyone is paid off (rarely happens) then the stockholders get paid. thats why they are called RESIDUAL owners. rarely happens in practice because stockholders almost always lose all of investment because there isnt much left.

let me know if we need to draw a chart to make it easy for ya!!

[DLBSR]

have said and continue to say we must restore our manufacturing and producing infrastructure before we will begin to see the light at the end of the tunnel. Our economy is based on the service industry and consumerism, both consumers of wealth not producers of wealth. We must protect the minimal manufacturing base we have remaining and strive to develop more. We must also learn how to produce clean and renewable sources of energy with an eye to becoming a net exporter of energy as opposed to a ravenous importer of energy. We must once again grow all of our agricultural products, once again increasing our exports. We can manufacture everthing we as a country consume, and all of what the world consumes. We can once again become the manufacturers and producers of steel, pre-cast concrete forms, plastics and composite fiberglass structures, piping, glass, etc.. We can begin to EARN OUR WAY OUT OF THIS CRISIS today instead of borrowing our way into oblivion. A perfect example for retaining our existing manufacturing capabilities is the domestic auto industry. We should nationalize the Big Three today and re-structure, re-tool, and consolidate the industry to build the affordable, high quality, green machines of the future. We can build them ourselves for ourselves. To see how go to: http://taxpayercommonsense.blogspot.com and click on the link entitled; Common Sense Plan To Rescue America's Auto Industry. We really can begin to earn our way out of this crisis.

[KillTheMessenger]

You are correct about almost everything but the US automobile industry. GM and the others are part of the problem, they are not part of the solution. The sooner they disappear, the better for the country.

[ferrarimanf355]

You're such a Toyota cheerleader, I don't know why anyone takes you seriously anymore.

[MadamRoma]

I will be glad when you disappear, literally, jerk.

[DLBSR]

Hello KTM
While I always value your opinion, I don't always agree with you. On this topic, I will once again respectfully disagree. The rescue model does not focus solely on GM'a past performance, but rather on the future potential for this entity if the nationalization model and business plans are utilized as a blueprint for recovery.

[ModeratePoliticalJunkie]

We also need to re-evaluate how we measure our overall economy. To further the point you made concerning how much our economy is driven by consumerism and the service sector, I believe that our actual GDP is mush smaller than the reported GDP. We have to learn from the wisdom of certain 'money-wise' ethnic groups in America. They earn, spend, and lend their money IN THEIR OWN COMMUNITY. Its time we put America FIRST. Then when we have our house and checkbook in order we can begin to help the rest of the world.

[Maschine]

Who said TARP money wasn't stimulating the economy

[spitar1]

Everyone?