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Politics : Politics for Pros- moderated
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To: J.B.C. who wrote (406135)1/23/2011 5:16:03 PM
From: rich evans3 Recommendations  Read Replies (3) of 794331
 
Frankly, I would not reach any conclusions expressed here by anyone. You need to have examined the Bankruptcy Filings by GM and the Proceedings. You have to understand Debtor in Possession Financing. The superior position of the Government which gave such financing, why no one else did or could. The Senior Bond holders had security in a bunch of worthless plants. The Government had the inventory and AR. The Government bought the good assets under a conwtested 363D proceedings free and clear of all liens. There was an army of lawyers arguing everything. The Judge applied the Laws of BR. The Bondholders did not have to agree to take 10% of the new GM. They could have had their security which would be the old plants which were a liability and some of the proceeds from the 363D sale after the Government got paid back its first priority DIP Financing. The Unions negotiated also to get about 16% of the New GM instead of their priority unfunded pension obligation which was much larger then the senior bond holders. The Government would have had to pay the pensioners anyway under the Pension Guarantee Board so it was just a question of which pocket. No one got paid off. It was all hard bargaining. If the Unions went on strike , GM was toast. They had both financial and employment leverage. So that is the way of BR and it ain't easy.

Rich
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