The reports are spreading that GM is preparing to file bankruptcy by June 1, being forced into bankruptcy by its new "owners" the US Treasury. The "pre-packaged" bankruptcy is designed to save the retired UAW workers at the expense of the American Tax Payer:
GM's leading bankruptcy plan would break the company into two parts: a good GM made up of strong assets, such as Chevrolet and the auto maker's Chinese operations; and a bad GM of underperforming assets and billions of dollars in obligations that essentially would be wound down in bankruptcy court.
Proceeds from the government's eventual sale of equity in the good company in part would go toward paying parties that have leverage over the auto maker. Those include the United Auto Workers union, which is owed tens of billions in health-care payments; and unsecured bondholders, who hold $29 billion in GM debt.
Even though unsecured bondholders would get stock in the good GM, the people familiar with the matter said bondholders are concerned that GM's so-called 363 sale unnecessarily pushes bondholders to accept hefty losses on their investments. Fox News
Included in the "bad GM" will be the company's obligations of health care and pensions for retired UAW workers:
One delicate issue for federal officials is the fate of G.M.’s employee pension plans, which could become the responsibility of the federal pension agency if G.M. seeks their termination.
G.M. faces an unfunded liability of about $13.5 billion for its plans, which had $84.5 billion in assets and $98 billion in liabilities as of Dec. 31. That amount could sink the pension agency, requiring its own bailout before a G.M. case could be resolved. NY Times
So to put things in plain English the governement will split GM into two parts, the good GM will be able to come out of bankruptcy relatively soon. The Bad GM will hold all of the money losing parts of the company, including UAW pensions. This will be funded by the US Treasury. Those of us who have seen our Pensions cut in half over the last 7 months will be paying for the former employees of a bankrupt company to recieve their FULL pension. Aint Socialism Great?
2 comments:
Certainly. I wish I had a private job that was guaranteed to be paid by the American taxpayers, like UAW contracts and pensions.
BZ
As thousands of General Motors workers await word on more U.S. plant closures, reports that the company plans to import Chinese-made vehicles to the U.S. have created a political problem for the automaker and the White House. http://pfx.me/BJ
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