I am missing something. Chapter 11 was a tremendous opportunity to fix errors of the past, but it appears to be already a lost opportunity. Delphi was part of GM and they are in bankruptcy just like GM. It would make a perfect sense to fold this division, called company, back since either one can not survive on its own. GM needs parts from Delphi, and Delphi does not have another large customer. Chrysler had Mopar and Ford owned Visteon and they had never intended to switch loyalties.
As a result, GM looks more vulnerable and weaker, since it must support Delphi, but it does not have full control. Those minority investors are not investing out of goodness of their hearts nor do they investing tax dollars. They will demand pound of flash if GM will stand on its feet, or even if it doesn’t.

How can bankrupt GM give $2.5B away when they already owe billions anyway? Won’t the government overlords strike down this idea?

^In order for GM to once and for all rid its self of Delphi (obligations) once and for all (the gift that keeps on giving for GM) and facilitate the sale/emergence of the company from Bk GM is giving 2.5B. The payout and absorption of four plants is necessary for the sale of Delphi to the Platinum group. Two things are important: (1.) this was already factored into to GM’s restructuring arrangements and (2.) If GM did not advance the money the Government would have been on the hook for Delphi’s remaining Legacy issues (UAW etc.) as the company would in all probability be liquidated – in a distressed market at that.

The main point here is that Washington could’ve/would’ve been on the hook if GM couldn’t pay out; so they essentially killed two birds with one stone. They were advancing GM money anyway so might as well clear the decks – another problem solved. UAW won’t be too upset either.

Think of the above as an abridged version of a very long – volumes – four year Bk proceeding. Note it’s not over yet, some of the pension stakeholders are still making noises. It is safe to assume that all parties want to finally put this saga to rest.

DB9

http://www.thestreet.com/story/10509865/1/gm-to-help-finance-delphi-buyout-report.html?cm_ven=GOOGLEN

WHAT-THE-FUNK !!!!

@DB9

Yay! An objective analysis instead of the knee-jerk “the American auto industry is evil, make them all die” comments.

So here is another payout from the $30 billion.

Where else will it be going?

^^^ Center for disadvantage kids in Chicago

i agree with Borat

I still think that this is a stupid idea and the government needs to stop giving loans to GM if they spend their bailout money like this

Borat: very interesting observation. I think under these circumstances, you’re absolutely right. Neither company can survive on its own. Unity is the key to the future. This goes for everything, including ourselves.

i’m not so nervous about this move…delphi and gm are linked, sure, but getting delphi’s 4 year bankruptcy over and done with is a good thing…re-absorbing delphi might not be feasible with the resistance from delphi’s debtholders, or a myriad of other reasons i can’t even fathom…

the cash infusion from the government loan was probably necessary to get this done, and aggie, i’m sure this is not a surprise to the government…as the article db9 linked, it was part of gm’s viability plan…so while this move may be news to us, its not news to the government…

as the joker would say, “because it’s all part of the plan”

I can’t believe nobody has commented on the figures yet:

GM (the government) gives 2.5b, and gets almost nothing.

Platinum Equity (Tom Gores) throws in .75b and gets the company.

BTW- This is a modification to the original plan, under this (yet to be approved) modified plan, GM is now responsible for the pension plans of Delphi workers, and is not planning on paying for them (Dropping all Delphi’s pension plans). I suspect this is the entire reason for the transfer of assets, and that we have not heard the end of this.