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GM & Bankruptcy: Won't Somebody Think About the Lawyers?

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Lionel Hutz, Attorney at Law

Lionel Hutz, Attorney at Law

It's good news/bad news time for General Motors.

On the downside: bankruptcy is looming. For a while, it looked as if things might shake out in the General's favor, sparing it from the fate that's befallen Chrysler. Today, however, the prevailing sentiment seems to be that GM will be heading to court shortly after the company submits its restructuring documents on or before next Monday, June 1.

Also on the downside: this bankruptcy is going to be big. As in seriously complicated. Possibly the most complex case ever to wind itself through the judicial system, based on the hours of manpower that's needed to shove it through, not to mention the sprawling assets and contracts that'll need to be negotiated.

On the upside: Chrysler's bankruptcy case is going swimmingly (if we can say that about a bankruptcy case), and it looks to meet the 30-day wrap-up goal set by the feds. GM's will take longer, but it's nice to see that people can stick to timetables.

Also on the upside: GM's bankruptcy will put a lot of people in business. Unfortunately, by "a lot of people", we don't mean automakers or sales personnel or anyone else who's already lost a job. No, we mean lawyers--battalions of them. In fact, the jokes about finding enough qualified bankruptcy lawyers to handle the case are only half-jokes. But the ones who're in it should make out like bandits: the law firm handling the Lehman Brothers bankruptcy have submitted an invoice for $55 million, and that's just for the first three months of work. At that rate, GM's case ought to keep every Lionel Hutz in the Lower 48 busy for a while--to say nothing of the hotels, restaurants, coffee shops, copy shops, and massage parlors needed to take care of them while their counting all those beans.

At what age is it too late to go back to law school?

[source: NYTimes]

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Comments (4)
  1. "GM WILL File Bankruptcy"

    The offer to the UAW. 20Billion debt = $10 Billion CASH and 39% of the new company.
    The offer to the government. $15 Billion debt = 50% of the new company AND half of the debt (7.5 Billion) remains owed.
    The offer to the bondholders $27 Billion debt = 10% of the new company.
    I'm a bondholder. I was offered 225 shares of the new GM for every $1000 GM owes me. In the fine print, this agreement comes with a 100:1 reverse stock split. This means for every $1000, I get 2.25 shares. If the shares double in value, that puts me at roughly $5 for every $1000 I am owed.
    Before anyone villainizes the bondholders for "pushing GM into bankruptcy", realize the offer we are given is neither fair nor equitable. The Fed gets 18x the return per dollar than the bondholders and maintains debts owed to them. The UAW gets 50% of their debt paid in CASH, AND they get more than 10x the return per dollar than the bondholders.
    The bondholders stand get pennies, maybe less than one penny per dollar, and they're being chastized for not jumping at the opportunity.
    Let's make sure we see honest analyses of the offers, please.
     
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  2. "Believe me..."

    ...I don't think anyone at TCC is blaming bondholders for trying to get remuneration. If anything, we applaud your tenacity.
     
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  3. "'splain it to me..."

    I just don't really understand how a law professor can advocate upending bankruptcy laws for the sake of preferred constituents who are further down the food chain regarding liabilities. isn't that, well, illegal and immoral?
     
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  4. "GM crap"

    The era of V8's is long gone, but they got it too late... Stop making junk!
     
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