GM,Chrysler 'Skidding' Their Way Through Bankruptcy
This week GM and Chrysler will transform the auto industry by skidding into and through bankruptcy.
If they can avoid a major car wreck, perhaps Uncle Sam's "controlled bankruptcy" plan will work.
Either way, neither company will be them same, and in the case of GM, it is about to become a dramatically different company.
GM: Today: Expect the bond holders to reject the debt exchange offer. These guys are ticked off (to put it politely) they are only getting 10 percent of GM in exchange for $24 Billion in debt while the UAW will get up to 39 percent for $10 billion it is owed. They'll take their chances on getting more in bankruptcy court.
Wednesday: We could see the German government and the auto maker sign off on the preferred bid for GM Europe. While most Americans could care less who gets Opel and Vauxhall, the winning bid will have a huge impact on GM and Chrysler. If Fiat does not get GM Europe, it will be tougher for CEO Sergio Marchionne to achieve the scale he wants to turn a profit. If Fiat struggles to stay in the black, Chrysler will suffer.
Next Monday: Expect GM to file for bankruptcy. June 1st is the deadline the President set for GM to restructure itself or wind up going into bankruptcy. When the bond holders reject the debt exchange offer, the government will say, "Ok, let's do this in court." But let's be honest, GM has been headed this way for weeks, and everyone has known it.
Thursday: While Fiat CEO Sergio Marchionne is pressing to win the sweepstakes for GM Europe, Thursday is the day a bankruptcy judge will hear arguments for the final sale of Chrysler. Dealers, pension plan administrators and creditors are likely to fight the sale of "good" assets to the new Chrysler run by Fiat. That said, many believe the new Chrysler will be approved. This would be the final major hurdle for Fiat to take control of Chrysler.
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