Logan Kissinger
How it all started

In 2005, GM reported a loss of $10.4 Billion

In 2006, attempts to obtain U.S. government
financing to support pension liabilities
failed.

In 2007, yearly loss was $43.3 Billion.
 Sales for the following year dropped 45%
Congressional Hearing

On November 17th, 2008 GM
representatives along with executives
from Ford and Chrysler testified about
their need for financial aid.

Projected it would run out of cash around
mid-2009 without a combination of
government funding, a merger, or sales of
assets.
"Restructuring Plan for LongTerm Viability"

“U.S. auto sales across all manufacturers,
foreign and domestic, have declined by
more than 30% and are at their lowest per
capita levels in half a century.”

“We propose both loans from the Federal
Government and the empowerment of a
new Federally-created Oversight Board to
help facilitate all the necessary changes
for a successful restructuring of the
company.”
Bush administration answers

Congress initially declines to act.

Bush steps in by providing a bridge
loan with the requirement of a revised
business plan.

GM asked for $50 Billion total, and
needed $4.6 Billion loaned within
weeks to stave off bankruptcy.
New President
On the March 30, 2009 deadline
President Barack Obama declined to
provide financial aid to General Motors,
and requested the company produce
credible plans.
 He also suggested that Chapter 11
bankruptcy appeared the most promising
way to reduce its debts, by allowing the
courts to compel bondholders and trade
unions into settlements

The end is coming

United States government officials
suggested that, if they were satisfied with
the company's plans to restructure, the
U.S. government would take at least a 50%
equity stake and reserve the right to
name board members.

The U.S. government would invest up to
$50 billion and own 60% of the new GM
and the Canadian government would own
12.5%
The Filing

GM filed for Chapter 11 reorganization
in the Manhattan New York federal
bankruptcy court on June 1, 2009 at
approximately 8:00 am EST.

The filing reported $82.29 Billion in
assets and $172.81 Billion in debt.

4th largest filing in US history.

One of the first motions filed in court was one to
void the leases on the seven corporate jets, and
corporate aircraft hangar at Detroit Metropolitan
Wayne County Airport, for being no longer
valuable to the company's business — a lease
that the company had, according to its
spokesman, found itself unable to escape in 2008
when it had tried to.

The court gave interim approval to GM's request to
borrow US$ 15 billion as debtor-in-possession
funding,
 GM only had $2 Billion cash in hand.
 The US Treasury argued in court that without the money
from the loan General Motors would have no option but
liquidation.
Planned Sale

The plan for General Motors'
bankruptcy is to auction off the
company's assets in a section 363 sale.

Because the price that these assets are
expected to sell for is very high, there is
expected to be only one bidder in the
auction, a new company NGMCO Inc.

GM sold off brands such as Hummer,
Saturn, and Saab.
TARP Assistance

Old GM received $13.4 billion from the U.S. Treasury,
the first of several loans made through TARP. Old GM
received additional loans from TARP $6 billion in May
2009.

New GM increased the loan amount by approximately
$40.7 billion which was effectively converted into an
initial 60.8% equity stake.
Flash Forward

The partial sale of this stock has returned
approximately $20.6 billion and the U.S
Treasury has received approximately $0.8
billion in dividends and interest along with
approximately $0.1 billion in other
recoveries from the bankruptcy process of
Old GM.

Approximately $19.1 Billion to be
recouped.

The government now holds approximately
241.7 million shares, or 17.7% of GM’s
common equity

For the government’s remaining 17.7% of
the company to be worth $19.1 billion, the
price of GM stock would need to approach
$80 per share, between two and three
times what the U.S. government has
received for any of its previous sales of GM
stock.
Why I chose this topic

My grandfather worked for General
Motors for 34 Years.

401(k) did not exist at the time of his
retirement, most of his money was
company stock

GM sold off salaried pensions, he lost
all benefits