GM's big move....

[Guest daveagain909]

I was just watching a news program and they were talking about the chrysler bankruptsy. they were saying that the new company being run by our government will be owned as follows. 51% owned by the government (socialism).35% by the union (why?), 10% by the I can not remember and 1% for the bond holders (which includes many retirement funds). why is the union getting anything? the bond holders prior to the bankruptsy owned over 50% and was legally 1st in line. but somehow the latest party in power does not follow the law and gave the bondholders share to the union. Maybe someone out there can explain why? I really would like to know?

[Ronnie]

I could give you a good answer that you probably wouldn't want to hear but we are not allowed to discuss politics here and this has nothing to do with the Buick Reatta so I will follow the rules and not discuss it. I suggest you do the same.

[Guest daveagain909]

You have had a lot of comment before and I did not start this. I agree politics is not to be discussed, but GM going out of business is. Again I did not start this.

[Rawja]

Daveagain-

The government get a share 'cause they've (we've) paid for it. Once the company(ies) return to health and pay back those loans the government (us) will divest and this whole fiasco won't have cost the taxpayers a dime, at least one would hope for this outcome.

The union gets their ownership stake because the companies owe contractual benefits to the healthcare funds. The healthcare funds cannot pay doctors, hospitals and prescription costs with shares of stock, so they will necessarily sell off those shares to meet the operating expenses of the healthcare funds and will divest as necessary to meet those obligations.

Bondholders are NOT first in line for anything, and never were. Wages, benefits and taxes are all ahead of them and often (depending on the structure of the bond issue) vendors are ahead of them as well. Bondholders invested in the company and were receiving interest terms in exchange for assuming risk. Unfortunately their investments in GM and Chrysler turned out to be in retrospect, bad investments.

This is straight-up bankruptcy law, not politics.

[Ronnie]

Rawja, I you may have given the wrong answer. I think Daveagain wants to put down the current administration and the unions and get someone to argue with him about it. I'm not going to get dragged into that argument again. Maybe someone else will.

[Guest daveagain909]

RAWJA, I just finished reading the law on bond holders right to assets in a bankruptcy, and They, the bond holders do have a agreement which gives them ist in line rights to assets of chrysler. read the law as it protains to this bankruptsy before you make comments like you know the law. It is easy to find by googleing "chrysler bond holders rights".

[Rawja]

From Bloomberg.com :

<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body">The U.S. bankruptcy code allows for workers to get preference over bondholders, said Richard Hahn, co-chairman of the bankruptcy practice at Debevoise & Plimpton LLP, a New York law firm, who isn’t involved in the GM negotiations. Section 1114 of the bankruptcy code requires that a debtor “timely pay” all “retiree benefits” unless the bankruptcy court orders otherwise or the authorized representative of the recipients of those benefits agrees to other treatment, he said.</div></div>

I just went through both personal and corporate bankruptcy, the first question my attorney asked... Are all your tax obligations paid? Second: Have the union benefits been paid? The monies I did manage to collect in the process of the wind-down went first to the union, then what was left went to the creditors.