GM In "Intense" Preparations For Bankruptcy: Report

Reuters:

General Motors Corp is in "intense" and "earnest" preparations for a possible bankruptcy filing, a source familiar with the company's plans told Reuters on Tuesday.

A plan to split the corporation into a "new" company made up of the most successful units, and an "old" one of its less-profitable units, is gaining momentum and is seen as the most sensible configuration, said another source familiar with the talks.

Read the whole story: Reuters

Comments

[planetjeffy]

Most companies do not emerge from bankruptcy successfully and GM will not either. There is nothing left of GM that can compete on a global basis or at home.

[rpahk]

Splitting up GM could make some sense or at least consolidating brands. Hummer and Saab should be dumped. Opel and Saturn should be spun off as a stand alone company as you get Opel's great designs and Saturn's US dealer network. Pontiac and GMC brands are redundant. Buicks are popular in China and could be here too if they sold the great Chinese designs and not the stodgy US models. GM could prosper with 3 brands: Chevy at the mass market, Buick as upscale niche and Caddies as BMW killers.

[watchTVgetSTUPID]

The government must crack down on unfair trade with other countries. Like virtually all US manufacturing companies, the only thing that will save it from extinction is forcing other countries to increase their currencies until trade balances.

[JohnPlayerSpecial]

I don't want to see anything drastic happen to GM, particularly the demise of Pontiac or Saturn, but some sort of serious reorganization of the company's operations needs to occur. I despise the SUV fad as much as anyone, but instead of wasting energy assigning blame at GM, the company needs to develop more fuel-efficient models, and they need to do this with long term goals in mind. The Volt is a good idea, but a whole line of hybrids is desperately needed, too. The need for speed is always fun, but haven't we all eaten just a little too much of the purple acid? The new Camaro pounds out 304 hp from its six-cylinder model! Have we not already been running enough radar traps with the Camaro SS and the Mustang GT? The Smart Car is a brilliant idea, but it's built by the most expensive mass-produced brand in the world. What we need is a Chevy Smart Car built in the US of A!

The Celebrity Eurosport should have been the General Motors Beetle and they blew it:

http://floydmorr.blogspot.com/2008/10/eurosport.html

GM used to own a chunk of Lotus, the basis for the Tesla, and they sold it!:

http://floydmorr.blogspot.com/2008/10/lotus-schmotus.html

Plastic Ozone Daydream: The Corvette Chronicles:

http://www.e-tabitha.com/2008/12/plastic-ozone-daydream.html

[drymartini1]

GM has TOO MANY BRANDS. thats a fact. close down pontiac and buick and just concentrate on chevy and cadillac. How many brands do toyota and honda have ?? huh.

[steelmill]

Maybe people want a choice

[liminal67]

Intense...­.? What does that even mean....

http://pitchbendpost.blogspot.com/

[econ1]

The sooner GM and Chrysler go though bankruptcy the better for all. Having the government subsidize GM and Chrysler just makes it harder for Ford (the only reasonably well run company of the group). Imagine having the government loan thousands of dollars to one of your competitors (no matter what you do)....it would make it a lot more difficult for you. One or two strong companies will be better than three weak ones. Let Fiat, Ford...who­mever... pick up the viable brands and move on.

[davidwayneosedach]

My - aren't we getting dramatic with the words! Shut up, shut down, and go bankrupt already!

[cbates]

The fall of the auto industry in this country is due to our politicians allowing the new manufacturers to dump their cars into this market without assiting the Big 3 with thier legacy cost. How is it possible that the politicians could think the Big 3 could compete with low cost foreign autos due to cheap labor, and technology theft and no legacy cost is beyond me.An easy solution to the legacy cost problem is to have all that sell into this market to share in those costs which would level the playing field.

Yes, the Big 3 is partially to blame becuase they continued to dump huge gas guzziling trucks, cars and SUVs into the market knowing that our environment was suffering and we were at war with in an oil producing country in the middle east. Yet, the decline had started long before the war and the Big 3 did not respond to the looming crisis. Now someone let me know why Diamler is not being questioned around Chrysler?

[KillTheMessenger]

Uhhh... somebody bought the propaganda of the US automobile industry, hook, line, sinker, fisherman, boat, engine and anchor.

Buying Chrysler was one of Daimler's worst moves.

[StellaDuBois]

Nope - allowing Daimler to buy them was one of Chrysler's worst moves. Daimler looted the company.

Since separation Chrysler has improved. Daimler has gone back to sucking.

[KillTheMessenger]

Let's go. We had enough of this delaying. GM is simply reaping the results of 10 years of utter mismanagement that came after 30 years of poor management.

[machinegunmonkey]

If my take home pay didn't actually shrink this year (due to increased insurance premiums and stagnant pay), I might have been looking at buying a new vehicle. As it stands now I just need to keep my current vehicles running.

[drymartini1]

keeping current vehicle running is one of the BEST MOVES. be glad that you have the common sense that most people lack here !!

even accounting for fix-up costs you are better off driving an old vehicle. the problem is not car sales. the problem is people's notion that cars are meant to be traded in every 3-4 years.

[IndieBlue]

If they hadn't designed and built their non-commercial vehicles around the theory of forced obsolescence, it would be a lot easier to keep them running. They don't do this for taxis or police cars. Similarly, if they would stop pushing the lease scheme [read scam], less people would get the absurd notion that they need a new car every few years.

[notAMoron]

Bye, bye bailed out babies. Hopefully the viable brands emerge stronger than ever.

[LeonBNJ]

One problem I see with a bankruptcy of both or either GM and Chrysler, it the obscene amounts of money that will be spent on attorneys and financial advisors leading up to and through one. Top Attorneys, top partner level accountants and other advisors getting $1000+ and hour, even paralegals billed out at $200/hour (and maybe only seeing $25/hour in thier pocket, their employers taking the rest). The courts have to approve the fees to be paid by GM or Chrysler. I hope they make massive reductions in the fees to be paid, with the balance being available to go to creditors, like thier suppliers and retiree funds.

[KillTheMessenger]

An experienced paralegal (at least where I live) gets about $80k/year. That works out to over $40/hour just for the salary. I would say the real cost to the law firm is probably on the order of $60+/hour. It would be quite natural to bill $150-200/hour for such an employee.

[957]

The Obama administration is defending the Bush administration's wiretapping program, this is HUGH but you won't read it here folks.

[All in All]

I'm sure that it's on this site somewhere; if you build it they will come, and if it's news it will be projected.

smack Myself :)

[SangZe]

No, you won't find it on many sites. Obama seems to be moving closer and closer to Bush and the things Bush gave us. So much for change. We can't do it.

[mergina]

GM and Ford still sell tons of trucks. Why don't they continue to pump out the trucks and vehicles needed around the world to keep our lives moving on a daily basis, totally shut down autos, and release new exciting, nicely designed, fabulous gas mileage vehicles? They continue to pump out the crap no one wants. GM has far too many models. Just take a look at the history of VW for a lesson in how to restructure and become a giant in the car world. They started from scratch, LITERALLY from bombed out factories after ww2, and they did it with ONE MODEL, the bug. That vehicle would be a dreamy choice today for any company starting up.

[Joeblue]

Ever drive a Bug in the winter? Dreamy does not come to mind.

[apduncan1]

If I can get 30mpg I wouldn't mind.

[notAMoron]

Thats what Tesla and some of the new electric car companies are doing. I think the people with vision to create new and exciting cars have thrown in the towel on Detroit and moved on to greener pastures where their creativity and ingenuity can flourish.

The Detroit 3 aren't just bogged down by unions they are also bogged down by a lack of ability to attract talent thanks to their track record of failure.

[StellaDuBois]

An auto company isn't just about designing cars. It's about building them, too. California doesn't know how to build sh*t. Detroit builds. It's no lie that during WWII in their peak production efficiency month of April 1944, just before the government scaled back its orders, Ford cranked out a bomber an hour - 455 bombers in 450 clock hours (one every 59.34 minutes).

[unitron]

The VW was around before the end of World War II. Supposedly Hitler had a hand in the decision to create it and in the naming of it. (People's Wagon)

[All in All]

A plan to split the corporation into a "new" company made up of the most successful units, and an "old" one of its less-profitable units."

I almost was confused with the overall premiss of the above quote, since it almost seemed as if all of the holdings were just going to be put into one Company (good&bad)­....

after re-thinking what was said about GM & the plan above I could & will think that the good parts of GM will be structured into a new Company, and the so-called bad parts of GM will be structured into it's own new Company also; which gives each individual Company & parts to prove their worth (in a way).

Sold :) The majority of People will be able to live with such a plan!

[notAMoron]

I think the "bad" company will be pretty much liquidated not necessarily continue operations.

This is what I envision a GM bancruptcy entailing:
Think Hummer, Saturn, and Pontiac plants and inventories on the auction block. Foriegn brands spun off as new companies in their respective countries. Dealer franchise network shrunk by 40-60%, UAW contract forced to be renegotiated and a Renaissance tower clears house with their white collar workers, and maybe even Renaissance Tower sold. Bondholders settle for $.30-$.40 on the dollar or in the form of stock equity in the new GM (of course current shareholders wiped out).

[drymartini1]

sounds right in the ballpark to me. good analysis.