It looks like you're using an Ad Blocker.
Please white-list or disable AboveTopSecret.com in your ad-blocking tool.
Some features of ATS will be disabled while you continue to use an ad-blocker.
GM, Chrysler Say Bankruptcy Is Imminent Without More Aid
U.S. auto sales continued their free fall into February, as big rebates and low-interest financing failed to lure people back into car dealerships and showrooms.
Today General Motors reported that its sales slid 53 percent in February compared with the same month a year ago, and Chrysler sales dropped 44 percent.
Ford's sales tumbled 48 percent, despite distinguishing itself from cross-town rivals in recent months by keeping the company afloat without federal aid.
TOP General Motors executives are more open to a speedy bankruptcy reorganisation financed by the US Government, pushing aside earlier concern that such a move would scare away so many customers the company wouldn't survive, said a person familiar with the matter.
While the company still wants to avoid bankruptcy, the new view represents a reversal from GM's position late last year, when it sought a federal bailout. The change in thinking, combined with the disclosure that GM's auditor has raised "substantial doubt" about the carmaker's ability to keep going, appears to move GM closer to the possibility it will file for reorganisation.
Both developments come as President Barack Obama's auto task force is trying to decide how much additional aid to provide GM. They also come as GM is locked in negotiations with its bondholders to trade debt for equity.
First and foremost, the US automakers would be able to break UAW contracts. Under the current system all UAW employees, past and present, have the power to vote on UAW contracts. This means that the retirees, who greatly outnumber the current rank-and-file, generate significant influence over the current contracts in order to protect the benefits they have worked their lives to obtain.
The Canadian Auto Workers union said Sunday it had reached a tentative agreement with General Motors Corp. on a multiyear pay freeze and other concessions needed to qualify the company for government aid.
President Barack Obama’s auto task force comes to Detroit tomorrow amid Republican calls to let General Motors Corp. go bankrupt and waning public support for giving automakers taxpayer loans they say they need to survive.
The task force will give its “sense of direction” by March 31, Rattner said. The companies have received $17.4 billion since December and asked for the additional $21.6 billion in aid last month, an amount that depends on achieving turnaround plans that are “somewhat ambitious,” Rattner said.
General Motors Corp Chief Executive Rick Wagoner will resign from the top job at the struggling automaker, a person familiar with the matter said on Sunday, just a day before the U.S. government makes a key announcement on whether it will extend more aid.
The person, who declined to be identified because the decision has not been made public yet, did not provide further detail.
General Motors Corp. is speeding up preparations for a possible bankruptcy filing even as directors seek deeper savings this week to avoid that outcome, people familiar with the plans said.
The bankruptcy readiness focuses on forming a new company from GM’s best assets if necessary
The Times, quoting unidentified sources, said the Treasury Department has directed officials at General Motors (NYSE: GM) to lay the groundwork for a "surgical" bankruptcy filing that could last as short as a few weeks for portions of the company. Those portions would be the "good" parts of the company, and the "less desirable" parts of the company would remain in court for much longer and possibly be liquidated, according to the Times.