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From the article it appears the bondholders. Apparently these people do not believe in losing in the market. They want their cake and everybody elses.
That or the fact that they are first in line and they are getting pushed to the back and screwed in favor of a UAW payback.
Few took the company up on its bond-exchange offer, making bankruptcy very likely within the next week. The government could receive as much as a 70% stake in the company.
GM bankruptcy expected as bondholder offer fails - Los Angeles Times
Are we bailing out GM or the bond holders?
From the article it appears the bondholders. Apparently these people do not believe in losing in the market. They want their cake and everybody elses.
That or the fact that they are first in line and they are getting pushed to the back and screwed in favor of a UAW payback.
Your uniformed populist rhetoric aside; the Bondholders didn't like the deal because the UNIONS would have a bigger share without any investment than they would with the newly restructured company. Can't say that I blame them.
GM's proposal would give bondholders a 10% stake in the automaker, even though they currently own about 40% of the company's debt. The Treasury would get about a 50% stake in GM.
Under both plans, the UAW would receive about a 40% stake in the company.
GM's clock is ticking down - May. 22, 2009
Yeah, that sounds like a GREAT deal to me. What a shocker that they would question such an asinine offer. :rofl
Your uniformed populist rhetoric aside...
pop·u·list (ppy-lst) KEY
NOUN:
A supporter of the rights and power of the people
Your uniformed populist rhetoric aside; the Bondholders didn't like the deal because the UNIONS would have a bigger share without any investment than they would with the newly restructured company. Can't say that I blame them.
GM's proposal would give bondholders a 10% stake in the automaker, even though they currently own about 40% of the company's debt. The Treasury would get about a 50% stake in GM.
Under both plans, the UAW would receive about a 40% stake in the company.
GM's clock is ticking down - May. 22, 2009
Yeah, that sounds like a GREAT deal to me. What a shocker that they would question such an asinine offer. :rofl
That or the fact that they are first in line and they are getting pushed to the back and screwed in favor of a UAW payback.
Also, not that the hedge funds that are involved in this and rejecting the deal are acting as they tend to in these cases. They make more money from bankruptcy, so tend to hold out and not settle. Something wrong with the system there.
That's how bankruptcy law is designed to work - what's wrong with that?
If those protections were not available, people would be reluctant to invest in the first place. Strong investor protections are the hallmark of an stable and secure economy.
Ok, I know for sure you know more on this than me, so maybe you can answer a question for me in this regard: shouldn't the system be that the bondholders benefit more from settling outside of bankruptcy, than in bankruptcy? It seems that the system as is is designed such that bankruptcy becomes almost an inevitability, since the bondholders have no incentive to avoid it, and in fact the incentive is to encourage it. If bankruptcy is a preferred option, why have we tried so hard to keep Chrysler and GM out of bankruptcy?
That's how bankruptcy law is designed to work - what's wrong with that?
If those protections were not available, people would be reluctant to invest in the first place. Strong investor protections are the hallmark of an stable and secure economy.
shouldn't the system be that the bondholders benefit more from settling outside of bankruptcy, than in bankruptcy? It seems that the system as is is designed such that bankruptcy becomes almost an inevitability, since the bondholders have no incentive to avoid it, and in fact the incentive is to encourage it. If bankruptcy is a preferred option, why have we tried so hard to keep Chrysler and GM out of bankruptcy?
Because all we do is create paper work. I'm an investor not a lawyer BTW.
It is workers that create a product to sell from the assembly line worker to the engineer to the designer not the pencil pushers and they the workers creators are the people that are worth long term retirement investments.
We've tried so hard because it was the popular thing to do, because the UAW would be forced into a less... advantageous agreement.
If I invest a million into a company, my money should come before someone who doesn't invest in said company, and further more, if that company is failing, I should get the most of my money back possible.
That's how the world works.
First, this isn't my area so don't take anything I say as authoritative (not that anyone should regardless of the area).
The system isn't really any particular "way" - it is what it is. Whether bankruptcy is better than the alternatives depends on the facts of each particular case and the alternatives available.
In most cases, there aren't really any alternatives. If a company can't find a buyer and can't make ends meet, there is just bankruptcy left. In those cases, there are very particular rules about who gets what. The creditors were aware of these rules when they made their investments, so they knew what they were getting into and what they can expect.
The reason why there's so many alternatives in these cases is because the government has an interest in how the cases turn out, so they're inserting themselves into the process, whether by advocating for a particular division, making promises to various parties, or offering incentives for other companies to come in and purchase assets. The result of this is that the normal rules don't apply. Creditors who normally could have predicted what they would get no longer have any idea. On top of that, they're being outright threatened by the government that if they don't go along with what the government wants, they will be ostracized as "not playing nice" and will get on the ****list, which absolutely nobody wants to be anywhere near nowadays.
It's creating a lot of uncertainty, and is having significant effects on how willing corporations (esp. investment vehicles) are to get involved in anything even tangentially related to the government.
Because all we do is create paper work. I'm an investor not a lawyer BTW.
It is workers that create a product to sell from the assembly line worker to the engineer to the designer not the pencil pushers and they the workers creators are the people that are worth long term retirement investments.
I do not think the UAW is why President Bush decided to bail out Chrysler and GM.
If you invest millions in a company, you should certainly be in line to get money back, but if the company does poorly, you certainly should expect to lose money. The system as now has investors who actually benefit from a company failing, which is not a good thing.
No investor is making more from the company failing than they would if the company had succeeded. Everyone is taking a haircut on this, the secured creditors most of all.
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