Home -> Law Blog Directory -> Loan Modification Blogs -> Mortgage Lender Implode-o-Meter

Loan Modification

: Mortgage Lender Implode-o-Meter

Credit Default Swaps Holders Likely to Force GM into Bankruptcy

By Implode-Explode Heavy Industries

"It only takes opposition by 10% of the bondholders to stymie an out-of-court restructuring of GM. The FT believes that there are enough bondholders who, via being net short GM bonds via credit default swaps, have good reason to block a negotiated outcome and force the automaker into bankruptcy. And that poses risk to the economy, since there are meaningful odds that the fast track solution of a 363 sale will be opposed successfully, producing uncertainty as to when GM will exit bankruptcy and putting further strain on the supply chain. GM is a big actor in its ecosystem, and too much damage to its supply chain will hurt all US based car-makers, including the transplants."

Full post as published by Mortgage Lender Implode-o-Meter on May 12, 2009 (boomark / email).