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GM Bankruptcy question

LLC5

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I have asked this question before, but never recieved an answer.

1) Does anyone know if GM and Chrysler have to legally pay back the billions that were given to them by Obama before their bankruptcy, or is the debt wiped clean and they are NOT legally required to pay it back?
 

Mark Leevan

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Payback of loan probably iffy

I have asked this question before, but never recieved an answer.

1) Does anyone know if GM and Chrysler have to legally pay back the billions that were given to them by Obama before their bankruptcy, or is the debt wiped clean and they are NOT legally required to pay it back?

The government and UAW are stockholders in a bankrupt company. IF they come out of bankruptcy and IF they return to profitability, the government and UAW can sell the stock.

See this post for chance of that happening.
http://www.corvetteactioncenter.com...ley-says-detroit-must-start-over-survive.html

Read this quick: admin has banned me from two other IP addresses.:chuckle
 

Rob

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The government and UAW are stockholders in a bankrupt company. IF they come out of bankruptcy and IF they return to profitability, the government and UAW can sell the stock.

See this post for chance of that happening.
http://www.corvetteactioncenter.com...ley-says-detroit-must-start-over-survive.html

Read this quick: admin has banned me from two other IP addresses.:chuckle
Well isn't this a pleasant surprise. Hello Mr Leevan....or should I call you "Mr Van Patten"?
 

catbert

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...and the first handout to GM was given by Mr. Bush.:)
 

LLC5

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So I guess the answer is that they are not legally bound in any way to pay back the billions in "loan" money, and the only way that we may ever see any money back in return is to sell the stock for a profit?
 

catbert

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So I guess the answer is that they are not legally bound in any way to pay back the billions in "loan" money, and the only way that we may ever see any money back in return is to sell the stock for a profit?

Not exactly. The corporation can "buy back" (at some agreed upon price) with Board approval. That has traditionally been a tool to increase management power and increase the value of the remaining stock. GM can choose to buy back the Feds stock, and probably would love to do that - providing they can generate the money to do it. I'm sure the Feds would vote their stock in favor of a buyback, and so would the unions, and that's a majority of all GM outstanding stock. Now all that remains if for GM to turn a profit.;shrug
 

LLC5

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Not exactly. The corporation can "buy back" (at some agreed upon price) with Board approval. That has traditionally been a tool to increase management power and increase the value of the remaining stock. GM can choose to buy back the Feds stock, and probably would love to do that - providing they can generate the money to do it. I'm sure the Feds would vote their stock in favor of a buyback, and so would the unions, and that's a majority of all GM outstanding stock. Now all that remains if for GM to turn a profit.;shrug


Thanks catbert, good explanition. I wasn't aware that it was set up that way.

Couple of questions though if you don't mind. You say GM can choose to buy back the Feds stock (which is all good and great, and I hope it does happen), but do you know if there are their any regulations/laws that state that they must buy it back for say 9 billion dollars or more (interest?) or could they be allowed to buy it back for say 1 dollar (probably a little extreme on that figure, at least I hope so)? Do you know if Chrysler is set up the same way? Thanks for the input.
 

catbert

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Thanks catbert, good explanition. I wasn't aware that it was set up that way.

Couple of questions though if you don't mind. You say GM can choose to buy back the Feds stock (which is all good and great, and I hope it does happen), but do you know if there are their any regulations/laws that state that they must buy it back for say 9 billion dollars or more (interest?) or could they be allowed to buy it back for say 1 dollar (probably a little extreme on that figure, at least I hope so)? Do you know if Chrysler is set up the same way? Thanks for the input.

Absent any detailed information about the initial deal, I can only speak about general practice. A corporation can OFFER to buy back stock at ANY given price. Market factors like a stock's current value, (GM has little or no current value as witnessed by the stock price and lack of stock transactions) profitability, and business outlook usually dictate the offer price. Obviously, GM has to pull out of the tailspin, generate profits and have a healthy prognosis before their stock does ANYTHING. That said, Chrysler under Iacocca was in a similar position.

GM is making some decent cars, and have more on the way. Now all they need are buyers. That pretty much will dictate EVERYTHING.

The thing to remember is that the value of remaining stock (the value of the corp divided by the number of outstanding shares) will soar if GM can buy back stock from the Feds. But in reality, the corporation would likely reissue most of the stock and offer to the public in an efffort to raise operating capital.
 

joshwilson3

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I'm glad I never bought any GM stock, actually I don't play the stock market. But I know alot of retires had alot of stock, and some were given stock for early retirement way back, and now all of that is worthless.
 

NORTY

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I think the "payback" will be in the form of votes for a certain party that favors big labor unions...
 

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