"Surgical" Bankruptcy for GM is back in the news

[XDCX]

The New York Times is reporting that a "Surgical Bankruptcy" of General Motors is possible and sources indicate that it could happen by June 1 if GM cannot reach an agreement with their bond holders and the UAW.

A "surgical" bankruptcy would split the "good" portions of GM away from the existing company and leave the "bad" portions to go through a drawn-out bankruptcy process. The "good" portions of GM would likely be the Chevrolet and Cadillac brands as well as key assembly plants. The "bad" portions would be their pension obligations, bond debt obligations, weaker brands, unwanted plants, etc.

The New Your Times reports that it's possible the "good" portion of GM could emerge from bankruptcy in as little as two weeks.

It's too early to say what this might mean for GM dealers.

Here's a link to the news report: http://www.nytimes.com/2009/04/13/business/13gm.html?ref=global

[dduke]

I think the question most GM dealers have is> How will this affect unpaid warranty claims, incentive payment and advertising dollars. With the current slow pay process GM has in place most dealers are due thousands of dollars from GM and will this allow them to leave the dealers hanging?

[CL Pgh]

I believe this “surgical” bankruptcy being discussed will leave many, many more victims than what’s being described! I hope someone realizes before it’s too late… this isn’t the airline’s!

[okcarl]

I was in a meeting with Kate Hardy from GM recently where the issue of a BK and how dealers would be handled were discussed. She put it in no uncertain terms that if GM goes BK dealers will loose any recievables they are owed up to that point. We are constantly monitoring our recievables with both manufactures to hopefully limit our liability in the event of a filing.

[XDCX]

I was in a meeting with Kate Hardy from GM recently where the issue of a BK and how dealers would be handled were discussed. She put it in no uncertain terms that if GM goes BK dealers will loose any recievables they are owed up to that point. We are constantly monitoring our recievables with both manufactures to hopefully limit our liability in the event of a filing.

That's interesting, I wasn't aware that anyone from GM had made a statement about what would happen in the result of a bankruptcy filing.

The fact that the dealers would lose their receivables is consistent with everything that I've read so far. Essentially, the dealers would be grouped in with all of the other "unsecured" creditors with the possibility of being paid nothing but cents on the dollar. :(

[dduke]

So GM can walk away from receivables, GMAC can walk away from flooring with penalties and stupulations that can't be met and the dealers go away. Is it possible that this is what they want? No union, no dealer body and then you can just get your new car from Wal-Mart. Very scary times for someone that has spent their entire career believing in the big bow tie.

[XDCX]

So GM can walk away from receivables, GMAC can walk away from flooring with penalties and stupulations that can't be met and the dealers go away. Is it possible that this is what they want? No union, no dealer body and then you can just get your new car from Wal-Mart. Very scary times for someone that has spent their entire career believing in the big bow tie.

You nailed it, these are truly amazing times. :(

What worries me about a ""Surgical" Bankruptcy is it appears the government is going to be making up the rules as they go along. I've already heard Congressmen who want to pass legislation so the suppliers get paid 100% of their receivables. Their theory is that many suppliers will go bankrupt in the event of a GM bankruptcy and that will result in further job loss.

The bad news is I don't see anyone lobbying for the dealers.