Bankruptcy

The Beat Goes On

By mcbride

The pattern is a) a government bail out of once private company followed by b) the need for more money by the target company followed by c) additional cash (read tax money) infused into target with the stipulation that the government will now have the ability (either immediately or at some future point) to own the company or at least direct its management (forcing a change of management at GM or forcing a bankruptcy and sale of all assets to Fiat at Chrysler).  Now it is GMAC?s turn to take that final step. ?The Treasury Department is preparing to announce as early as today that it will invest an additional $7.5 billion in GMAC LLC in a deal that could allow the U.S. government to hold a majority stake in the Detroit-based auto finance company. GMAC, whose financial good health is key to providing loans for consumers to buy General Motors Corp. and Chrysler LLC vehicles, has been in talks for several weeks to secure additional capital. It had hoped to close the deal last week.? 

 Link: http://www.detnews.com/article/20090520/AUTO01/905200376/Feds-to-inject-$7.5B-more-into-GMAC

Michael

Full post as published by Texas Lawyer Blog on May 21, 2009 (boomark / email).