Bankruptcy

GM Restructures Ownership

By mcbride

In what is likely to be the first major restructure of a once private US company conducted by the Treasury Department, GM has announced its proposed ownership structure under the new plan.  In a huge ?loan to own? move, the US government would swap its debt for equity, the unions would get a large share of equity and existing equity would retain almost no ownership of the restructured giant. 

 ?Calling the proposal ?neither reasonable nor adequate,? an ad hoc committee of GM bondholders said it believed ?the offer to be a blatant disregard of fairness for the bondholders who have funded this company, and amounts to using taxpayer money to show political favouritism of one creditor over another?. The Obama administration?s auto industry task force, which has pushed for more aggressive action by GM, said the revised plan reflected the carmaker?s work over the past month in charting ?a new path to financial viability?.?   Generally speaking, it seems unlikely that no one would object to this restructure and send the company into either prolonged litigation or bankruptcy, where there are time tested rules on fairness which would guide a public restructure.   

Here is a link: http://www.ft.com/cms/s/0/a5326d50-332a-11de-9316-00144feabdc0.html

Michael

Full post as published by Texas Lawyer Blog on April 28, 2009 (boomark / email).