it appears as though the "plan" to find "market solutions" that would enable gm debt to be mitigated has been swamped. if you believe the german government, by gm itself, by the giant sucking sound of it's high-speed implosion:
Quote:
General Motors talks hit brick wall in Berlin
• All-night negotiations fail to reach agreement on sale of GM's European arm
• German government unhappy about new loan demand
• Uncertainty remains for Vauxhall in the UK
* Graeme Wearden
* guardian.co.uk, Thursday 28 May 2009 13.46 BST
All-night negotiations over the sale of General Motors's European arm broke up without agreement in the early hours this morning, leaving UK carmaker Vauxhall facing an uncertain future.
The German government blamed GM for the failure to strike a deal, saying the beleaguered firm had unexpectedly declared that its German-based Opel unit needed a new €300m (£260m) loan. The finance minister, Peer Steinbrück, said the demand was "a nasty surprise" and "a bit of an outrage".
General Motors Europe said this morning that negotiations on the Opel Vauxhall viability plan, which ended before dawn, would continue on Friday, adding "it hopes to have a resolution soon".
Only two firms are now in the running – the Italian carmaker Fiat and Canadian auto-parts maker Magna. US investor Ripplewood Holdings and China's Beijing Automotive Industry Corp have both withdrawn.
Speaking to journalists early this morning, the German economy minister, Karl-Theodor zu Guttenberg, said it had been "a bizarre night".
"The talks were turned upside down by GM's unexpected demands. We do not have the assurances we need in order to extend a bridge loan," Guttenberg said.
Bloomberg has reported that Magna executives indicated they might be able to accommodate the latest demand.
The German government has already extended billions of euros of aid to Opel, which employs 25,000 people in Germany, and is prepared to provide an extra €1.5bn bridging loan if it can be transferred to a trust and protected if the rest of GM goes bankrupt.
European finance ministers are also due to meet on Friday afternoon, amid concern over the way that the German government is handling the sale of GM Europe. There are fears that the chancellor, Angela Merkel, might give assurances to a buyer that violate state aid rules, such as securing jobs in Germany at the expense of other European countries. Belgium is thought to be particularly concerned about the future of an Opel plant within its borders.
General Motors appears to be heading for bankruptcy after its bondholders yesterday refused to exchange $27bn (£17bn) of debt for stock – which the US treasury had insisted must happen before GM received any additional help from the taxpayer. GM must present a viable restructuring plan by Monday 1 June. If, as expected, it files for legal protection from creditors, then the US government could end up owning as much as 70% of GM in return for $50bn of funds.
The crisis at the Detroit-based motor manufacturer has raised fears that Vauxhall's 5,500 UK workers at its factories in Luton and Ellesmere Port could lose their jobs. Tony Woodley, the joint general secretary of the union Unite, said yesterday that any successful bidder for GM Europe would close some of its plants, and accused the government of not doing enough.
But the business secretary, Lord Mandelson, told the Guardian that the main bidders for GM Europe had all told him that Vauxhall production would "continue indefinitely'. On Sky News, Mandelson accused Woodley of "creating needless fear" among his members and other Vauxhall workers". He also admitted that some job losses across GM Europe were inevitable even if the division was sold.
What next?
If Germany can agree terms with a buyer, then Opel would move into a trust that would protect its patents and technology from GM creditors. GM is likely to seek bankruptcy protection on or before Monday 1 June. Opel would remain in the trust while the details of a sale were hammered out, which could take until the autumn.
Magna and Fiat are both seeking billions of euros of funding, so there is no certainty that the German government will acquiesce – even with an election looming. If a proposal cannot be agreed, then Opel would probably be forced into administration. That could lead to parts of the business being sold to provide cash to keep it running.
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General Motors talks hit brick wall in Berlin | Business | guardian.co.uk
so much for "orderly bankruptcy.."
the way i see this, the obama administration really has to decide to act in a more explicitly social-democratic manner at this point, and do it fast. if the american auto industry is understood as central to socio-economic stability---not to mention whatever "prosperity" means in system terms at this point---then it should be nationalized outright, a plan for it's near-to-medium term put into place etc. if the administration does not act, it is effectiyely saying that the auto industry in general, and gm in particular, are not important enough to act in order to save.
it seems to me that the socio-economic consequences of allowing gm and it's entire supply and distribution chains to simply collapse far outweigh the value of any neo-liberal bromides taken from a mangled version of schumpeter--you know, all this "Creative Destruction" nonsense.
at the same time, gm was the weakest of the us manufacturers...
the breakdown in this "market solution" plan is symbolically not a good thing...the theater of it may be enough to send all those "rational actors" in the markets scuttling for the door again. i suppose we'll see.
what do you think should happen next?