It's final. GM will file for bankruptcy this morning

Posted Jun 1st 2009 7:15AM by Connie Madon
Filed under: Industry, Employees

Well, now, we can say it's a final, final. GM bondholders voted Saturday on a plan to exchange their debt for an ownership stake as high as 25%. The bondholders have the the sticky wicket in the restructuring plan for GM. They had steadfastly refused to fall in line until the last minute. At stake was $27.2 billion of debt that bondholders were holding. Finally, at least 50% of them agreed to the swap. Now GM can file for bankruptcy protection on Monday morning.

The United Automobile Worker Union, through its retiree health care fund, will receive a 17.5% stake in GM and warrants to buy an additional 2.5%. Bondholders will get a 10% stake and warrants to buy an additional 2.5%. The Federal Government has lent GM $20 billion since December and will end up owning about 70% of the company.

It has been a long and tough struggle to restructure GM, but now this whole mess will soon be behind us. The fallout in terms of GM sales has not yet been determined, but one could guess that GM lost a big chunk of sales during the past few months.

Should GM have had to file bankruptcy?

Tags: GM bankruptcy, GM bondholders, GmBankruptcy, GmBondholders

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Reader Comments (Page 1 of 1)

6-04-2009 @ 11:50PM

h mccaulley said...

I own 12,000 shares or so of GM stock. I bought american to support not only what I considered and american institution, but a large portion of the american workforce. If my stock is rendered worthless, I will immediately sell both GM vehicles we currently own, and will make every effort to encourage people in similar positions to not only do the same, but also NOT invest again(if and when that becomes possible), and blog, email, and call every public political figure we have elected and the white house to address out concerns about our interests not being looked after. Who do you think will buy these cars when this is all over? Losing my stock value will not break us as a family. Fortunately we also have invested in other more viable stocks as well; but the foul taste we are left with will certainly linger. The company will ultimately fail if the common stock holders hare not taken care of. That is a fact. Thank you for your time...who ever if anyone is stuck reading these not-so-fun emails. The average person in retail with a negative experience tells 11 people, and those people statistically tell 7 and so on and so forth. The ripple effect from this will kill any reconstruction of the company.
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