Reports are coming in that a GM bankruptcy is now probable.
General Motors Corp. may be more likely to end up in bankruptcy based on the Obama administration’s willingness to place Chrysler LLC into court protection to safeguard union health-care benefits.
With GM and its biggest bondholders at odds over resolving $27 billion in unsecured claims by a June 1 deadline, the Chrysler model indicates that President Barack Obama may resort to bankruptcy to end any impasse over that debt, said Martin Fridson, chief executive officer of New York-based credit investment firm Fridson Investment Advisors.
Of course the articles are all about these hedge funds, investment firms should get their money all the while screwing the workers. If this is the case, the Obama administration is using bankruptcy to protect the pensions and health care of UAW workers, that's a good sign frankly.
Here is the issue with the bondholders:
GM bondholders proposed April 30 they get a 58 percent ownership stake in the Detroit-based automaker in exchange for their $27 billion in unsecured claims. Bondholders are objecting to GM’s proposal they get a 10 percent share of GM equity while a union health fund would get $10 billion in cash and as much as a 39 percent stake for their $20 billion in unsecured claims.
But it's yet to be seen what happens with Chrysler in reality and having 2 of the 3 U.S. auto makers in bankruptcy at the same time, all the while it appears Chrysler will become foreign owned as Italian Fiat, doesn't sound too reassuring.