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MrRodgers -> RE: Trump -- Socialist Dictator (10/9/2017 12:39:11 AM)
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quote:
ORIGINAL: DesideriScuri
quote:
ORIGINAL: bounty44
i didn't follow all these goings-on intimately, but isn't that essentially what happened with GM a handful of years ago?
GM went through bankruptcy and the Feds effectively changed the rules about who was first in line, and such. The bondholders were fuuucked over in that. A stink was made, but it died quickly and was largely ignored. I think they were "paid off" with extra shares of the new company (which ended up not being worth much more than the paper they were printed on).
Having brought it up.....
Well bondholders under normal bankruptcy, usually get a short hair cut. ('were fucked' ?) But you'll have to fill me in on what rules were changed.
In a normal bankruptcy, the court approves or disapproves what's called a 'debtor-in-finance' (lender) whose role is to become an asset (equity also court approved) owner in exchange for financing continuing operations during either reorganization or liquidation.
Bush started with demanding in 3 mos., a creditable restructuring plan for $17.4 billion in federal loan guarantees but by 3/09 had run out then:
But in spite of the generous loans, extensions, and second chances, the Obama administration finally concluded that the companies' restructuring plans were insufficient. In the spring of 2009, it directed both automakers to proceed into Chapter 11 bankruptcy. (not liquidation chapt. 7 but reorganization) Chrysler filed on April 30, and GM on June 1.
In both cases, bankruptcy involved creating new companies the so-called "new Chrysler" and "new GM" in which the federal government would have a significant stake, and to which the bulk of the assets of the original companies (including all of their plants, equipment, brands, and trademarks) would be sold.
The original companies, meanwhile, would settle their obligations to creditors and shed those assets that would not be transferred to the new companies. Their shareholders would be all but wiped out.
Now the source in the link thinks the narrative of a successful bailout is wrong. In all likelihood, this re-organization would have produced a company more competitive than the one that emerged from the bailout process.
However, more than likely isn't good enough because we don't know and my position is supported by the fact that no private lenders would become 'debtors-in-finance' and didn't feel 'in all likelihood' would have produced a company more competitive than the one that emerged from the bailout process. Oh and BTW, GM stockholders were wiped out when the new companies formed.
Plus the argument went.....National Affairs says:
Instead of a regular bankruptcy proceeding, the Obama administration, working with the automakers, patched together a process without precedent a bankruptcy combined with a bailout, incorporating the worst elements of both.
So it was alright to use TARP on wall street because they were 'financial institutions' and didn't file for bankruptcy. But it was so-called 'rule changes' that allowed TARP to be used on the auto industry that file chapt. 11.
That is the 'new' financial culture in America, only bankers get a bailout and avoid bankruptcy, and GM or the auto industry and 100,000 jobs...can go fuck themselves. (the CEO of GM was forced out by Obama) What bankers were forced out ? (Ha !! they got $37 million in bonuses)
HERE
Also, GM went public with new stock in the largest public offering in history (at least at the time, don't know since then) after the turn around. Another financial orgasm for wall street...it being sooo horny.
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