Cadwalader, Rothschild Advising U.S. on Automaker Restructuring http://www.bloomberg.com/apps/news?pid=20601109&sid=aM4zN4WmWxEc&refer=home Feb. 6 (Bloomberg) -- A law firm with bankruptcy expertise, three capital-markets lawyers and an investment bank are advising the U.S. government on how to restructure General Motors Corp. and Chrysler LLC, two people involved in the work said. The U.S. Treasury Department hired Cadwalader, Wickersham & Taft LLP to evaluate several restructuring scenarios, including a government-funded bankruptcy, the people said. Cadwalader, hired last month, is working with Sonnenschein, Nath & Rosenthal, a Chicago-based law firm with capital-markets experience, and Rothschild Inc., an investment bank, the people said. A key question the Obama administration wants answered is whether the governmentâs $17.4 billion in loans to Chrysler and GM would be first in line for repayment, ahead of earlier lenders such as Citigroup Inc. and JPMorgan Chase & Co., the people said. âThey certainly need sound advice on the complicated area of bankruptcy and implications for the economy,â said Bruce Clark, an auto analyst at Moodyâs Investors Services. GM, the largest U.S. automaker, and Chrysler, controlled by private-equity firm Cerberus Capital Management LP, have a Feb. 17 deadline for a progress report on a viable restructuring plan. Unless the companies show by March 31 that they will be able to return to profit and repay the money, the government can demand repayment of the loans. Ford Motor Co., the second-largest U.S. car maker, has shunned the government handouts so far, and isnât a target of the work by the firms, the people said. Early Stage Cadwaladerâs work is at an early stage and has not gotten beyond a broad overview, the people said. Treasury spokesman Isaac Baker didnât have an immediate comment. Rothschild managing director Todd Snyder didnât immediately return a call and e-mail for comment. A Cadwalader spokesperson declined to confirm or deny the assignment. Sonnenschein spokesman Jeffrey Mutterperl said his firm is advising Treasury on âongoing matters related to the 2008-2009 developments within the U.S. automobile industry.â GM spokeswoman Julia Gibson had no comment. Chrysler spokeswoman Shawn Morgan didnât return calls for comment. Both automakers have dismissed calls to reorganize under bankruptcy protection, saying a Chapter 11 restructuring would scare away buyers and lead to liquidation. Cadwalader will advise the government on how automakers might be able to do some restructuring out of court, such as gaining concessions from unions and suppliers, the people said. That would make a court-supervised bankruptcy easier, they said. No Creditor Pact When the government loaned the $17.4 billion in December, it didnât work out an inter-creditor agreement that would determine its rights relative to past lenders. Cadwalader is working on such an agreement, as well as on related labor and environmental matters, the people said. Cadwalader is also advising the government on how it might become a so-called âdebtor-in-possessionâ or DIP lender, the people said. DIP loans fund a companyâs operations as it reorganizes in bankruptcy. DIP lenders get repaid before pre- bankruptcy lenders and creditors. Rothschild was retained to evaluate specific financial matters, such as what size such a loan would need to be, based on automaker business projections, among other things. Sonnenschein is evaluating other financial matters, such as how to structure a DIP loan, the people said. Cadwalader has prior expertise in DIP loans, having arranged the biggest such lending ever Jan. 7 for Lyondell Chemical Co. The company received $8 billion in financing from 14 lenders. That loan, which involved a âroll-upâ allowing pre-bankruptcy lenders to convert old debt to new debt, helped to raise new money amid the credit crunch. Cadwaladerâs Lawyers The bankruptcy lawyers leading the work at Cadwalader are Deryck Palmer and John Rapisardi, the people said. Sonnenschein lawyers working on the bailout include capital- markets partners Robert McCarthy, Jeffrey Murphy and Erik Klingenberg, Mutterperl said. All are former partners at Thacher, Proffitt & Wood LLP who were hired by the government in December to assist in investing in entities by purchasing asset-backed securities under the Emergency Economic Stabilization Act. Rothschildâs expertise includes representing Solutia Inc., a chemical maker that emerged from bankruptcy in 2008 after a dispute with Citigroup, Goldman Sachs Group Inc. and Deutsche Bank AG over whether the banks could pull out of a $2 billion funding of its restructuring because of poor market conditions. Rothschild also advised Delphi Corp., the bankrupt auto-supplier that was once a subsidiary of General Motors. Todd Snyder, managing director of Rothschild, is leading the Rothschild effort for Treasury, the people said. The Treasury Department has already provided a $6 billion bailout to GMAC LLC, which is partly owned by GM, and $1.5 billion to Chrysler Financial. Current Efforts GM and Chrysler are already both trying to restructure out of court, cutting labor costs, reducing debt levels and eliminating dealers. GM is in talks to pare $27.5 billion in unsecured debt to about $9.2 billion in a swap for equity, and it plans to shut dealers and reduce obligations to a union retiree health fund by 50 percent to $10.2 billion in a separate equity swap. Chrysler CEO Robert Nardelli has also said the company will try to cut debt levels. January sales results from automakers plunged 55 percent at Chrysler, 49 percent at GM and 40 percent at Ford. Bailout terms on this thread: http://www.elitetrader.com/vb/showthread.php?s=&threadid=148514&perpage=6&pagenumber=3
GM prepares progress report for Treasury SAN FRANCISCO (MarketWatch) -- General Motors Corp. has toiled over the past couple months to slash its workforce, curb employee benefits and highlight a rosier, fuel-efficient future -- all in attempt to remain viable and keep the money flowing in from Washington. Next week, GM, along with struggling rival Chrysler LLC, will see if its federal benefactor approves so far. Anything short of a thumbs-up and the promise of more funding could lead to an even more uncertain future for Detroit's ailing industry. GM spokesman Greg Martin said the plan will be submitted to the Treasury Department on Tuesday afternoon with a press conference to follow. He declined to comment on the specific issues that remain to be hashed out, other than to say GM is on track. story continues at http://www.marketwatch.com/news/story/gm-prepares-progress-report-treasury/story.aspx?guid={0510AE88-6C8B-4E68-B38E-EBDCBA349DD7}&siteid=yhoof
GM considering Chapter 11 filing, new company: report http://news.yahoo.com/s/nm/20090214/bs_nm/us_gm_plan CHICAGO (Reuters) â General Motors Corp, nearing a Tuesday deadline to present a viability plan to the U.S. government, is considering as one option a Chapter 11 bankruptcy filing that would create a new company, the Wall Street Journal said in its Saturday edition. "One plan includes a Chapter 11 filing that would assemble all of GM's viable assets, including some U.S. brands and international operations, into a new company," the newspaper said. "The undesirable assets would be liquidated or sold under protection of a bankruptcy court. Contracts with bondholders, unions, dealers and suppliers would also be reworked." Citing "people familiar with the matter," the story said that GM could also ask for additional government funds to stave off a bankruptcy filing. GM declined to comment, the story said. General Motors and Chrysler LLC face a Tuesday deadline to file restructuring plans to the government in exchange for receiving $17.4 billion in federal loans. Automakers have struggled as U.S. auto sales have tumbled amid a recessionary economy. U.S. auto sales in January tumbled to a 27-year low. GM has been in talks with bondholders and the United Auto Workers union to get an agreement on a restructuring that would wipe out about $28 billion in debt for the auto maker, sources have told Reuters. However, it appears unlikely a deal could be reached by the Tuesday deadline, they said. GM has already announced plans to cut 10,000 salaried workers worldwide, or 14 percent of its staff, impose pay cuts for most remaining white-collar U.S. workers and has offered buyouts to its 62,000 U.S. workers represented by the UAW. In addition, it is trying to sell its Hummer SUV and Swedish Saab brands and is reviewing the status of its Saturn brand.
Likewise, bond_trad3r Please correct me if I'm wrong - shouldn't this trigger some CDO. Then cascade reaction - bond insurers, etc. But it's very unlikely, because the gov't will bail them out again. And again. Also may affect some of the retirees pension.
Does GM have the taxpayers by the balls now? You bailed us out once, now do it again, otherwise we'll default on the debt!
Yes, which is why the government should stop loss and let it fail. There is no point chasing good money after bad.
$4 billion has just been given to GM ... Why is this so predictable? They'll bail out everyone albeit.
This would be hilarious: Our elected officials are busy patting themselves on the back after saving GM from imminent collapse by giving it another $4 billion dollars. Unbeknown to the politicians, GM continues to write up bankruptcy papers and intends to file the second the check clears. The look on our politicians' face would be priceless!