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 General Motors Corp. emerged from Chapter 11 Friday morning at 6:30 a.m. I spoke to Gordian Group LLC's, president and head of restructuring and distressed M&A, Peter Kaufman, who we interviewed back in June before GM filed for bankruptcy, about the automakers' re-emergence from Chapter 11.Kaufman feels that GM's troubles are not over quite yet and that the company still has some real challenges ahead. Besides operational hurdles, GM has to deal with being a much smaller player in the market, while also grappling with dragging car sales. He said: "I think it has some real operational challenges ahead of it. I am certainly rooting for them and hoping that they meet those challenges. What I know it does, it puts a chilling effect on the private money that would help the company. That money would do best in a private company, and now that there is a union component and a government interest in GM, capital providers will think very carefully before investing in it. It will make getting financing for the company much more difficult and expensive." Another challenge is legislation working its way through Congress that would force GM and Chrysler Group LLC to reverse the 789 dealership cuts made while in Chapter 11, which would ultimately affect GM's restructuring. Kaufman says this isn't a surprise. "What a surprise that politics is being played with a government-owned company. Of course it's going to hurt them they are agile companies. If they are going to restart the process with GM, then you have to ask, Why is GM in business? To make money? To make green cars? To keep funding union jobs? To do favors to local governments or lobbyists?" Several media outlets are referring to GM's quick emergence from bankruptcy as a success for the Obama administration, but Kaufman disagrees. "I don't believe that you can call it a success. I don't think it's really a success for the government to run the largest car company in the world," he stated. By the end of the year, the government will have to put $50 billion of taxpayer money into GM and more into Chrysler. The administration is hoping to take the new GM public again next year. - Maria Woehr Also see: GM speeds out of bankruptcy Congress v. bankruptcy law in bid to protect dealers And our video interview with Kaufman:
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Thanks for the analysis and opinion.
There areas where we don't see it the same way is the description of the GM being a success for the Obama administration, this is the next step as described and there is no reason to move slower.
There was no private money available for a couple reason, the liquidity issue that was universal and the dismal performance of Cerebus's buy out and mismanagement of Chrysler. For a group of folks that cry loudly of the performance advantages of the private market companies over government.
They single handedly set management back 5 decades with things like union fights and trying to cash out before they made anything good happen. As an entrepreneur that was painful to watch, more painful for the folks getting letters this week that the fund has imploded and they can't get their money.
So having no choice, the US and Canadian Governments now own most of the New GM. Obama says they they would like to take the company back into the public market as soon as conditions allow, to all investors that makes sense.
Why is GM in business? To make money? To make green cars? To keep funding union jobs? To do favors to local governments or lobbyists?"