Last Updated at 10:20

According to CNBC, General Motors (NYSE: GM) shares were halted as bondholders agreed to a sweetened deal. Shares have been reopened since. (This post is a live update). GM shares have jumped over 15% since trading has resumed.

This still doesn't mean a bankruptcy has been avoided, but at least creditors would not oppose attempts to sell GM's profitable assets to a new company -- the "New GM" -- sponsored by the U.S. Treasury.

General Motors (NYSE: GM) announced this morning that not enough of its bondholders agreed to swap its debt for company stock, pushing the automaker even closer to bankruptcy. GM was offering to exchange $27 billion in unsecured debt for 10% of the company's stock. The struggling Detroit damsel has until Monday to finish its restructuring or it will file for Chapter 11 bankruptcy protection. This deadline was set by the government and includes requirements regarding debt reduction, labor cost cuts and plant closures.

In a clock-stopping move, the United Auto Workers and GM have come to an agreement on a health care deal. The key provision of the deal is that GM would contribute shares instead of cash to a health-care trust known as a Voluntary Employees Beneficiary Association (Veba).

In so doing, the UAW would own 39% of GM. The mix of ownership would then be 50% to the government, 39% to the UAW and 10% to the bondholders, with the remaining 1% for current shareholders. The agreement still must be ratified by GM workers.

The pressure that the Administration is putting on the UAW and the creditors at GM (NYSE: GM) and Chrysler may be good for the two troubled car companies, but the help for the two weak companies could hurt the strongest one -- Ford (NYSE: F).

Any cost advantages that come out of deals forced on labor because of the threat of Chapter 11 will cut costs at GM, and might bring those costs well below what Ford has been able to get in concessions on its own. GM could end up with a substantial gross margin lead over the No. 2 U.S. car maker.

"We knew someone was going to have to take the proverbial `bullet,' and it would have made it a lot easier to accept that had the CEOs of the banks also been required to give up their jobs," said Jim Graham, president of a union local in Lordstown, Ohio, where GM produces the Cobalt and Pontiac G5 fuel-efficient cars.

The comparison isn't entirely unreasonable: Ken Lewis and Vikram Pandit should have been dumped out on the street too, and it's a testimony to both appallingly bad corporate governance and poor oversight by the federal government that either of them currently has a job doing anything other than dogwalking.

But why defend Wagoner? By defending Wagoner's "leadership", people like Mr. Graham are essentially admitting that GM was essentially destined to fail because of overseas competition and its uncompetitive labor costs. If they want to deflect blame from themselves, they should be embracing the Richard Wagoner as The Man Who Ruined General Motors script. Otherwise, there's nowhere to point the finger but inward.

Congress would like to keep the car companies viable and independent and is spending a lot of time and money toward those goals. As General Motors (NYSE: GM) and Chrysler reach the point where they need to have plans to show they can manage their businesses with government loans, the UAW is starting to give them a hard time. Someone is going to have to break the log jam.

According to Bloomberg, "The United Auto Workers union is objecting to proposals from General Motors Corp. and Chrysler LLC to modify a retiree health-care fund as required by the U.S."

The UAW is not moving at much of a clip in terms of negotiating with GM (NYSE: GM). There has not been a single sign of progress, no news of concessions on wages or benefits. Congress was hoping labor costs would be brought down to the level of what Japanese companies pay US workers.

Creditors also appear to be getting ready to give the US's largest car company a hard time. A successful bailout of GM assumes that bond holders will swap much of what they owe for equity or simply reduce the amount that they are owed or the interest rates on those sums.

According to The Wall Street Journal, "General Motors Corp. bondholders formed a committee to negotiate terms of a debt-for-equity swap, a key requirement of the auto maker's loan from the U.S. government."

The firms holding GM's bonds may simply tell the company that unless they get a good deal for turning in their bonds that there is not deal at all. Creditors may believe it is worth the risk that GM may go into Chapter 11.

The UAW and creditors are probably playing the same game of chicken with GM and the new administration. Can the government allow GM to fail when the stimulus package is set up to increase US employment by three million jobs or more? A bankruptcy could build a big hole if its causes Detroit and its suppliers to lay off over one million employees.

The creation of a creditors committee is bad news for GM.

Douglas A. McIntyre is an editor at 24/7 Wall St.

The ink is barely dry on the $13.4 billion in "loans" provided by the Bush administration at the end of 2008, but General Motors (NYSE: GM) is already talking about needing more. CEO Richard Wagoner says the company may look to secure additional government cheese in March -- earlier reports had suggested that GM believed the $13.4 billion would be enough to survive through 2009.

How does GM plan to demonstrate viability? It will need to secure broader concessions from the United Auto Workers union and, hilariously, try to convince bond holders to swap their debt for equity in one of the greater cash-burning machines in history. Good luck with that one!

Wagoner also said that GM is still looking to find a buyer for Saab. The company has denied problems in generating interest in the brand among potential buyers -- I'll believe someone is interested in buying Saab when there's a done deal. Similarly, GM has failed to generate any serious interest in Hummer, despite trying really, really hard to find a buyer.

GM's management has been extremely optimistic in terms of its "forward-looking statements," but so far it's all been bluster. Government officials should keep that in mind when GM brass shows up in March to demonstrate a plan for viability.

According to Bloomberg, "General Motors Corp. has enough government loans to cover the worst-case scenario it described last month and says it won't need more if the economy holds up." Under the current proposal GM would get $13 billion and GMAC has already gotten $6 billion.

The "if" part is the issue. GM's assumptions are way too optimistic.

Beginning on the cost side, if GM's employees, particularly UAW members, see a pot of money going into the car company, they are unlikely to take deep jobs cuts. The union has already said it has given enough. Creditors are almost certain to look at the infusion from the government as a reason to fight hard to keep their status and get full payment.

Looking at sales, GM still assumes a domestic vehicle market that will drive 12 million units sales a year. Based on December sales numbers, the run-rate for the entire US next year is closer to 10 million. GM may have to offer big incentives to keep its market share, which will push down margins even further.

Dream on.

Douglas A. McIntyre is an editor at 247wallst.com.

A Democrat as the new President. Usually the party favors unions. They give a lot of money. Democrats can also count on unions to endorse them and turn out the vote. Now it is time for the party which will control The White House and Congress to pay labor back.

It may not be that simple. According to The New York Times, "labor invested more than $300 million to help elect Mr. Obama and enlarge the Democratic majority in Congress, and it expects both to enact legislation that will make it easier for millions of workers to unionize."

The most obvious case that unions may not do as well as they had hoped is the UAW. Many car workers believe Obama may ride to their rescue. The Bush Administration said the UAW would have to go along with large cuts as their part of helping GM (NYSE:GM) and Chrysler. But, potential loans form the Obama Administration to the car companies may not push the union so hard.

The car companies are probably a bad example and the newspaper industry is probably a better one. It was once one of the largest employers in the US and is still a huge provider of jobs. No so long ago the unions representing reporters, drivers, and pressmen had the leverage with management to dictate terms which put their members solidly into the middle class. As the newspaper industry has moved into a downward cycle, these unions have lost their bite.

The Obama Administration could do something for the newspaper unions. It could help bail the industry out by giving papers loans. It could help guarantee jobs. But, that won't happen. The newspaper unions will die no matter what they did to get the Democrats in office. Obama knows there is only so much money to go around. If there is not enough to help unionized industries, that's tough luck.

Douglas A. McIntyre is an editor at 247wallst.com.

The New York Times has reported: The last Chevrolet Tahoe rolled off the line here in Janesville shortly after 7 a.m. in the 90-year-old plant, which had built more than 3.7 million big S.U.V.'s since the early 1990s. While the overall new vehicle market has dropped 16 percent so far this year, sales of big S.U.V.'s have plummeted 40 percent. Their closings leave the Big Three with only one factory each still devoted to making traditional big S.U.V.'s - Ford Motor (NYSE: F) in Kentucky, General Motors (NYSE: GM) in Texas, and Chrysler in Detroit.

The car manufacturers have been hit hard by tight consumer credit, the high cost of fuel and an overall slowing of the economy. All three manufacturers have been pleading with Congress and the White House for financial support and with the UAW for contract concessions. After Two of the three (Congress and UAW) failed to act, President Bush stepped in to provide an aid package of $17 billion to get the auto companies through the first quarter of 2009.

Despite the rescue package finally coming through Wall Street has not been impressed. The stocks of GM (NYSE: GM) and Ford (NYSE: F) are down 35% since the announcement. Ford closed yesterday at $2.19, down -0.40, losing -15.44% in one day. GM closed at $3.00, down -0.52, losing -14.77%.

Can either of these companies avoid bankruptcy if they cannot stay off the pink sheets? Is bankruptcy inevitable? Are you buying these stocks with hopes of a recovery?

Well George W. Bush is donning his Santa Cars hat this morning. This morning he announced a package of $17.4 billion in short-term loans. But he's doing it in a way which allows his successor to yank them all back on March 31, 2009. If Bush were still in office then, he'd no doubt pull back the money. But since Obama will be there instead, we don't know what will happen.

Here's Santa Cars' plan: He'll give automakers $13.4 billion in short-term financing from the TARP and an additional $4 billion could be available in February. But if the automakers are not financially viable by March 31, 2009, all the funds will be returned to the Treasury. What does financially viable mean? Santa Cars answer: "A positive net present value (NPV), which takes into account all current and future costs and can fully repay the government loan."