|
Chrysler, as you've probably heard, emerged from their bankruptcy proceedings a few weeks back. The incredibly quick court action (which many saw as a practice run for the much larger General Motors Chapter 11 filings) ended up with Chrysler having quite a few owners. Most notable is the Fiat Group, which has lent its small car technology to the company in return for a sizeable stake. Also, the labor unions and U.S. government have picked up large portions of the company. The most recent news came a few days ago when they announced their new Board members, who will usher Chrysler into the new generation.
Of course, Sergio Marchionne, the CEO of Fiat, has a spot on the board, as does James Blanchard, a former U.S. Congressman and a previous Governor of Michigan. Alfredo Altavill, the head of Fiat's Powertrain division gets a seat as well. And, in a move out of Ford's playbook, Douglas Steenland, former CEO of Northwest Airlines has a seat (Alan Mulally, the current CEO of Ford, also used to be in the aviation industry as the former CEO of Boeing Commercial Airplanes). What's surprising is that there's no direct representation on the board from the labor unions, who now hold a large stake in the company.
 |
|
General Motors Headquarters |
The big news with General Motors comes from the Bankruptcy Court. Judge Robert Gerbe, who is presiding over the proceedings, has given the official go ahead for the current General Motors to sell off its profitable assets to the "New GM." To break this down into non-legal lingo: all the money-making parts of the current General Motors is sold off to an outside company (it's really just the same company in all but name and legal status), meaning that all the unprofitable parts of the business (like the factories already slated for closure and all of the debt accumulated by the old GM) will stay in Chapter 11 and essentially be swept away.
This is good news for GM as an automaker that wants to stay in business, but bad news for anybody who has invested in the company. Let's say that you bought stock in the old GM (or your pension fund or other invesment group did, as was the case in many states). The debt from that stock, which GM is unable to pay, will essentially be wiped away, leaving those holding stock with nothing. There will be some money to help repay those debts, from the sales of some of GM's assets (for example, the machinery and real estate from the factories the GM already decided to close will be auctioned off to cover some of the debt), but it won't come anywhere near being able to cover the entire amount (if it had, they wouldn't have ended up in this mess).
It looks like the "New GM" will be out of the woods by July 10th (which was the Treasury Department's deadline before they cut off funding), which will put the entire proceedings at a length of six weeks. Considering that this was the fourth largest bankruptcy case in the history of the country, and the fact that the average length of time it takes an average citizen to go through Chapter 11 is about four months, that is a ridiculously quick time.
Comments and Discussion
|
|
