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Judge Set to Rule on Case that Could Reverse Auto Bailout

Home - by - December 8, 2012 - 22:00 America/New_York - 11 Comments

Free Beacon

A New York federal judge may rule imminently on a case that could reverse the General Motors (GM) bailout and send the company back into bankruptcy, according to sources close to the case.

At issue is a backroom deal hatched by GM to fulfill the Obama administration’s demand for a quick bankruptcy, draining the automaker of nearly all of its cash on hand and leaving it in worse shape than it was when it collapsed in 2009.

One condition of GM’s bailout was to shore up its overseas subsidiaries. On the eve of entering bankruptcy, the company cut a $367 million “lock-up agreement” with several major hedge funds to prevent GM Canada from failing. The agreement ensured that GM could spin-off its liabilities to “old GM,” while using a multi-billion dollar bailout to create a new company.

All of that could be reversed if bankruptcy Judge Robert Gerber reopens the process and rules in favor of old GM trustees, who are suing the hedge funds at the center of the lockout agreement.

“In this particular situation, there’s $1.3 billion in liabilities, but that’s just what’s officially back on the table if the court rules for old GM,” said a bankruptcy expert close to the negotiations. “If those go back on the table then everything could be back on the table and [new GM] would have to address them.”

Those liabilities, which include old GM’s debt and product liabilities that pre-date bankruptcy, are valued at $30 billion, a sum that would wipe out the company’s $34.6 billion cash reserves.

 

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» 11 Comments

  1. FreeMan & Sarah Intend to Defend

    December 8th, 2012

    Cool, and right after that I pray that all former stockholders sue the Fed for doing this and crashing the stock intentionally.

    This ought to be fun.

    Thumb up +3

     
  2. Xavier

    December 8th, 2012

    The first 5 words are all you need to read to know how this will turn out.

    Thumb up +5

     
  3. FreeMan & Sarah Intend to Defend

    December 8th, 2012

    True Xavier

    One fact of life on display here.

    Once the government gets involved with a business, everything, and everyone gets fucked.

    Thumb up +8

     
  4. stevie b

    December 8th, 2012

    Judge Robert Gerber reopens the process and rules in favor of old GM trustees

    gerber be eating baby food when the bummer thug ‘negotiators’ get done with him after he’s been out to walk the dog

    Thumb up +6

     
  5. Nutjob

    December 8th, 2012

    That was my understanding of a bankruptcy, is that the trustees have the final say so.
    and if GM had hidden, misused or miappropriated funds, intentioanal which is a felony or unintentional within the last year, those are to go to the trustee for the assumed debt.

    Let alone the trustee should get any of that money and or ownership of assets and cash.
    I’m just wondering how the hell the UAW has more authority then a bankruptcy trustee?

    Same goes for Obamacare, how can a healthcare law be passed and yet the unions be specifically exempt from paying fines, penalties or taxes on their cadillac plan? Thats the main reason Justice Roberts should’ve voted against it
    That alone should make the whole thing unconstituional showing favoritism, biased legislation, and taxation without fair and equal representation.

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  6. Bad Brad

    December 8th, 2012

    Sounds way to good to be true. Not going to happen. The Nazis have that covered and we are way behind as usual.

    Thumb up +4

     
  7. Blink

    December 9th, 2012

    “One condition of GM’s bailout was to shore up its overseas subsidiaries.”

    Wait, Wouldn’t that be Obama exporting jobs?

    As with most things Obama, he leaves everything in worse shape that they were before.

    Thumb up +5

     
  8. F.D.R. in Hell

    December 9th, 2012

    For all intents and purposes, GM is on the brink of becoming a China-based auto manufacturer. That was the ultimate purpose of the bailout.

    You will be driving GM cars built in China and imported to the US.

    Watch.

    Lucifer has a 2014 Volt on order. He chose the model that takes less than an hour to catch fire.

    :evil:

    Noteworthy Comment Thumb up +10

     
  9. Stranded in Sonoma

    December 9th, 2012

    I hate for GM to go bankrupt (really go bankrupt, with no bailout) because it will hurt a lot of people but not the unions. They got theirs and they ain’t giving it back.

    I originally thought it would be for the best. It would allow GM to move from MI to a non forced unionization state. But since MI is likely to now become a non forced unionization state, this step may not be necessary. Unfortunately, many of the workers in Detroit still have the union-thug mentality so moving out of MI would still be a good idea. I recommend Mobile, AL. Seaborne traffic into the port of Mobile for raw materials and outbound with cars, and no union (and no union mentality) to make them unprofitable.

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  10. HardyBrooks

    December 9th, 2012

    The former Brookly AF base is now a thriving industrial park, and Mobile was just awarded the new AirBus jet manufacturing facility, the first in the USA for a foreign manufacturer, primarily to escape the over burdening union demands in aerospace of socialist Europe. Skilled labor is abundant in the non union, right to work state of Ala, which is why there are now so many non union foreign auto manufacturing plants and ancillary plants for parts (Toyota builds all their USA car

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  11. HardyBrooks

    December 9th, 2012

    and truck engines in Huntsville, there is a completely empty GM plant in Decatur that GM still owns, rail line hub on site for east access to the SE and Mobile’s deep water port. Come and work for an honest day’s wage in mild winter weather, just leave your union asshole policies where they belong….

    Thumb up +2