Late Sunday a judge approved the sale of GM’s assets to a group comprised of the U.S. government, the UAW and the Canadian and Ontario governments under the name NGMCO, Inc. The decision will see GM exit bankruptcy court quickly with the ‘New GM’ assets going to NGMCO, while the ‘Old GM’ assets will be sold off to the highest bidder.

Judge Robert Gerber then placed a stay on the proceedings to for four days to hear objections or appeals, but as most of those have already been dealt with, GM is expected to reemerge as a new government-owner company by Thursday.

In a statement Judge Robert Gerber said that he would, “prevent the death of the patient on the operating table.”

Gerber pointed out the seriousness of the matter and the alternative, stating that, “The only alternative to an immediate sale is liquidation – a disastrous result for GM’s creditors, its employees, the suppliers who depend on GM for their own existence, and the communities in which GM operates.”

The New GM will be majority owned by the U.S. government with a 60 percent stake in the automaker. The UAW will get 17.5 percent, while the Canadian and Ontario governments will get 12 percent.

In response to the news GM’s CEO Fritz Henderson released a statement saying that, “A healthy domestic auto industry remains vital to the global economy and we deeply appreciate the support the U.S., Canadian and Ontario governments and taxpayers have given GM, and the sacrifices that have been made by so many. This has been an especially challenging period, and we’ve had to make very difficult decisions to address some of the issues that have plagued our business for decades. Now it’s our responsibility to fix this business and place the company on a clear path to success without delay.”

The Obama Administration’s auto task force has said that sale of GM back to the private sector could begin as early as next year.

[Source: Automotive News]

As a government imposed June 1st bankruptcy deadline looms on the horizon, the UAW is reporting that it has reached a tentative agreement with General Motors and the U.S. Treasury.

The specifics of the agreement will not be made public until the contract is ratified, however, the UAW did say that changes have been made to the employees retiree health trust, referred to as the Voluntary Employee Beneficiary Association. It is not clear if the UAW has worked out a deal similar to the one with Chrysler that would see the union take control of a portion of the company.

Negotiations between the Canadian Auto Workers (CAW), GM and the Canadian Federal and Ontario Provincial governments have yet to result in an agreement.

As with Chrysler, a ratified contract would not necessarily mean that GM would avoid filing for Chapter 11 bankruptcy protection.

[Source: Automotive News]

From start to finish, Chrysler’s bankruptcy proceedings could take as long as two years, according to a Bloomberg report. The article cites an administration official, and says that the initial period of 30 to 60 days for the “quick and surgical” process only refers to the period required to sell the major assets to a new company.

The remaining “bad assets” would then be divvied up by the courts to the remaining debt holders.

This may not be as big of a setback as it sounds at first, however, as the new Chrysler would no doubt be able to begin operations once it is able, which could turn out to be long before all of the court proceedings have concluded.

Currently Chrysler is still in bankruptcy court and the process does seem to be moving along swiftly as parties opposed to the merger have either withdrawn or been denied. It is not clear how much longer it will take to approve the sale of the “good assets” to the new company owned by Fiat, the UAW and the Canadian and U.S. governments

[Source: AutomotiveNews]

Starting Monday, Chrysler will idle most of its plants as the company restructures under a Chapter 11 bankruptcy filing. This will include 8 U.S. assembly plants, as well as facilities in Canada and Mexico. Other pre-assembly facilities will also face temporary closure including five North American engine plants, six stamping plants and seven transmission plants.

The temporary shut-down will effect 26,000 UAW workers and 10,000 Canadian Auto Workers. 

Chrysler is using the bankruptcy proceedings to its advantage, as the production stoppage will allow it to deplete the ever-increasing stockpile of vehicles.

The temporary shut-down is expected to take from 30 to 60 days, however, there is potential for it to extend beyond that.

[Source: Automotive News]

Less than a day after the UAW, Chrysler and Fiat agreed upon the terms of a contract that would keep the struggling U.S. automaker afloat, details of the agreement have surfaced in which the union will take a controlling share in Chrysler.

At first it seemed almost too good to be true that all sides had reached an agreement without the need for decreased wages. Instead the agreement stipulated that Chrysler would significantly reduce its participation in the employee retirement program.

The agreement came just days after a similar agreement had been reach between Chrysler Canada and the Canadian Auto Workers union – an agreement that was ratified the same day Chrysler and the UAW put together the current proposal.

Now word has leaked that in exchange for Chrysler’s reduced payments to the company’s retirement plan, the company had to essentially hand itself over to the union. In total, the UAW will get a 55 percent stake in the planed Chrysler-Fiat partnership, with Fiat initially taking a 20 percent share, with up to 35 percent ownership possible if certain conditions are met. 

The agreement now has to go before Chrysler’s 26,000 workers, with voting on Wednesday in order to ratify the agreement ahead of the government’s end-of-month bankruptcy deadline. If the deal is reached and Fiat signs on, the Federal Treasury will provide Chrysler (or should we say the UAW) with $6 billion to keep the automaker afloat.

Meanwhile, one other major player (which has been incredibly quiet during this ordeal) has agreed to remove itself from the situation. Daimler will shed its 20 percent stake in Chrysler and rethink ever working with a U.S. automaker again.

[Source: Automotive News]

Several major news outlets are reporting that General Motors is planning extended shutdowns of its U.S. plants this summer. The plants would be idled for as much as nine weeks from mid-May through July.

While it is common practice for plants to idle for a “summer break” during the sunny season, that period has traditionally only been two weeks and not the two months that General Motors is planning.

The move is considered a necessity as the struggling automaker suffered a sales decline of 49 percent in March and currently has a stockpile of vehicles that can last 122 days.

A representative of the United Auto Workers union told the Associated Press that plan managers will be meeting with the union today and tomorrow to discuss production changes and some plants.

There is no word on if the extended shutdowns would apply to GM’s other North American facilities.

[Source: Automotive News]

Fiat is about ready to walk away from a potential partnership with Chrysler says CEO Sergio Marchionne unless the U.S. automaker can significantly cut labor costs. While the United Auto Workers union has made it known that it is willing to work with Fiat and Chrysler management, the Canadian Auto Workers union isn’t.

“From what I can tell from a distance, the CAW may have taken more rigid positions,” said Marchionne in an interview with Canada’s Globe and Mail newspaper.

Currently Chrysler and the CAW do not see eye-to-eye. The automaker has asked the union to cut labor costs by $19 CDN to $55 to match hourly wages in U.S. plants but the CAW will only go as far as reducing hourly wages by $7.25 (an amount GM workers agreed to recently).

Marchionne did not mince words in his interview with the Globe saying that a sense of entitlement in an organization that is technically bankrupt was nonsense and that the involvement of the U.S. and Canadian governments in a bailout plan was a sign of last resort for Chrysler.

Marchionne said that there is currently only a 50 percent chance the deal could go through. Meanwhile Moody’s Corporate Finance recently said that Chrysler has a greater than 70 percent chance of going into bankruptcy.

Meanwhile the Obama administration’s April 30th deadline is fast approaching.

[Source: Globe and Mail]

According to the reliable folks over at GMInsideNews, on Monday the Obama Administration will announce a bankruptcy deadline for both General Motors and Chrysler. 

It has been rumored that the government will release more details about its aid for the U.S. auto industry on Monday, but now it appears the announcement will include this strong-arm measure by the feds. The “brankruptcy deadline” will be a specific date by which both companies will have to have their finances in order. For General Motors this means a date by which it will have its ongoing issues with the United Auto Workers and bondholders resolved. If the companies cannot comply with the request of the Auto Task Force it will force both U.S. auto giants into a “pre-packaged” Chapter 11 bankruptcy filing.

[Source: GMInsideNews]