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New Film Reveals the Reality of the Auto Bailout

“Live Another Day” – but at what cost?

by on Sep.12, 2016

Storm clouds over Detroit. At the depth of the recession, two of the three US makers went bankrupt.

The economy was collapsing more rapidly than during the Great Depression, and nowhere was that more apparent than in Detroit, where the Big Three automakers faced the very real prospect of going out of business – destroying a million or more jobs in the process.

Ford Motor Co. was able to survive by mortgaging everything; not only its factories, but even its Blue Oval logo. General Motors and Chrysler didn’t move fast enough to secure equity lines. They had to be salvaged with the help of the largest federally funded bailout in history. It broke precedent and, many would argue, broke the law. The rescue effort may also have saved the economy, according to its proponents.

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Was it good or bad? “It was something in-between,” contends Bill Burke, suggests Bill Burke. He’s a media industry veteran and co-producer of the new documentary, “Live Another Day,” which has received strong praise on the film festival circuit and which will open at theaters nationwide on September 16th.

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GM’s Legal Problems Continue to Grow

Automaker likely to be center of Presidential campaign this fall.

by on Jul.20, 2016

Donald Trump's selection of Indiana Gov. Mike Pence is likely to keep GM as well as Fiat Chrysler in the news. Pence was a critic of the auto baillout.

If you listen to General Motors executives, the company’s 2009 bankruptcy is an event from the company’s distant history. For GM’s lawyers, however, the bankruptcy and its aftermath is still very much alive.

Many of the creditors have never given up trying to recover the money they say is owed to them by what has come to be known as “Old GM,” and the trust that has liquidated assets, primarily real estate that the company abandoned, during its short trip through bankruptcy court back seven years ago.

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Earlier this week, the dissatisfied creditors won the right from bankruptcy judge in Manhattan to pursue a $1.5 billion claim, stemming from the bankruptcy. (more…)

GM, Ford Insist They Will Remain Profitable in Deep Recession

Taking a “forward lean” into a “downside scenario.”

by on Mar.28, 2016

GM's Alan Batey introducing the 2017 Chevy Bolt.

Seven years after Detroit’s auto industry nearly collapsed, officials at the two largest domestic makers are taking pains to assure investors they will not only survive but thrive during the next big economic downturn.

Fears that the U.S. car market has peaked after hitting record sales of 17.5 million vehicles last year has made Wall Street increasingly wary, driving down the share prices for all the domestic makers, even as they report strong profits. But two top General Motors and Ford executives painted very different pictures for investors as the New York Auto Show opened to strong public attendance.

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“We believe the market is eventually going to plateau, but not in the immediate future,” declared Alan Batey, president of GM North America, during the annual Automotive Summit sponsored by Bank of America Merrill Lynch. And even if sales do take a tumble, he stressed, “We have reduced our break-even point to between 10 million and 11 million annual sales for the industry.”

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GM Bankruptcy Judge May Rescind Liability Shield

Removing protection allows lawsuits to proceed.

by on Feb.18, 2015

GM CEO Mary Barra may be facing a tougher year in 2015 if a federal judge rescinds the company's bankruptcy shield.

After securing an important court victory in January, General Motors is on the precipice of a potentially devastating loss as the federal bankruptcy judge that approved the maker’s plan is rethinking the company’s liability shield.

U.S. Bankruptcy Judge Robert Gerber heard arguments about whether or not GM can keep the shield, which blocks victims of the company’s faulty ignition switches from suing the automaker, which exited bankruptcy in 2009.

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Essentially, since the defective parts were on vehicles manufactured prior the bankruptcy, the “new” GM can claim it is not liable for those vehicles. However, the shield can be revoked in some cases, including if it can be proven that GM executives knew about the problem when it was putting together it’s plans in 2009. (more…)

GM Gets Deadline Flurry of Compensation Claims

Fund receives 455 total filings for death benefits.

by on Feb.03, 2015

GM saw 1,100 new filings for benefits from its victims compensation fund just before the Jan. 31 deadline.

The Jan. 31 deadline for claims to General Motors’ victim compensation fund spurred a flurry of 1,100 new filings.

The rush brought the total number of filings to 4,180, including 455 death benefits: an increase from 338 the week prior. Claims for the most severe injuries rose to 278, up from 224 a week earlier, and filings for less severe injuries jumped to 3,447 from 2,508 a week earlier.

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The fund is administered by Kenneth Feinberg, an attorney whose firm oversaw similar funds related to the BP oil spill and other issues, who said in a radio interview yesterday that he expects the total number of filings to rise a bit more because any claims post marked for Jan. 31 will be accepted. (more…)

Government Lost $9.26 Billion Saving Auto Industry

Treasury made more than $2 billion on GMAC deal.

by on Dec.30, 2014

The Treasury exited GM more than four years after the maker's 2009 bankruptcy.

The U.S. government lost less than $10 billion rescuing the auto industry, which was four times less than some estimates.

The Treasury initially estimated the loss would be $44 billion, but revised it to $30 billion in 2009. Under government accounting rules, the U.S. Treasury actually lost $16.56 billion on paper because interest and dividends paid isn’t applied toward the principal owed.

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The government was repaid through a combination of stock sales, partial loan repayments, dividends and interest payments. (more…)

Federal Judge Urges Settlement of GM Lawsuits

Most of the cases claim economic losses.

by on Aug.13, 2014

One of the replacement ignition switches.

A federal judge is encouraging attorneys to settle over 100 lawsuits that have been brought against General Motors in cases involving the maker’s defective ignition switches.

The majority of those cases involve economic losses, claims that used GM vehicles have lost value as a result of the maker’s ignition switch recall. But about a dozen of those cases involve personal injury claims, according to the Associated Press. In all, attorneys represent nearly 1,000 individual plaintiffs suing GM.

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U.S. District Judge Jesse M. Furman said he intends “to encourage settlement as much as possible.”  But whether the plaintiffs’ attorneys take the jurist’s advice may depend on what happens in another courtroom.

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Taxpayers Taking Bigger Hit on GM Bailout

Total rises to $11.2 billion after accounting error.

by on Apr.30, 2014

The government bailout of General Motors is going to cost taxpayers $11.2 billion: $826 million more than originally expected.

U.S. taxpayers are taking a bigger loss on the General Motors bailout package than $10.3 billion originally reported. Due to an accounting error, the loss is actually $11.2 billion, according to a report released today.

The Treasury Department reported an $826-million administrative claim had been written off on March 20. However, the claim, which has not been revealed, cannot be written off.

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The figure surfaced in a report by the Office of the Special Inspector General for the Troubled Asset Relief Program, which was charged with overseeing the federal government’s economic stimulus program. (more…)

A Decade Later: Olds Was the Canary in GM’s Coal Mine

Last Alero rolled down the line on April 29, 2004.

by on Apr.28, 2014

Lansing workers watch the last Oldsmobile Alero as it comes off the assembly line.

It was supposed to be the car that would help save the troubled brand. But instead, it was the last car Oldsmobile would build.  This Tuesday marks the 10thanniversary of the demise of the once popular brand, a decade since a dark red Alero sedan rolled off the line at the old Lansing Car Assembly Plant as the last car Oldsmobile would ever build.

Lansing had been the home for the brand for more than a century, Ransom Eli Olds cobbling together his first motorized carriage in his father’s shop in Michigan’s capital city in 1897. The Curved Dash Oldsmobile he started producing four years later was to become the country’s first truly mass-produced automobile, an early pop culture sensation that inspired the 1905 hit song, “In My Merry Oldsmobile.”

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Purchased by General Motors in 1908, Oldsmobile would eventually sell as many as 1 million vehicles a year. But as the new millennium approached, the brand was clearly past its prime, and like the proverbial canary in a coal mine, it was sounding the alarm for a crisis that would ultimately drive GM itself into bankruptcy.

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Bankruptcy May Save GM Once Again

Filing terms prevent pre-2009 product liability lawsuits.

by on Mar.10, 2014

The 2004 Saturn Ion Coupe is on the list of vehicles being recalled by GM, but the automaker may not be accountable for the vehicles.

Bankruptcy saved General Motors and it may save the company again, at least from a significant liability issue and the millions of dollars that might go with it.

When GM went through bankruptcy it created a “new” GM leaving the debt and many of the liabilities with the “old” GM. This separation extends to product liability, according to an Automotive News report.

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Under the terms of its restructuring, GM’s product liability extends only to accidents that happened after the “new” company exited bankruptcy in July 2009, Automotive News reported. Plaintiffs injured before that time would have to take “old” GM to Bankruptcy Court. The chances of getting compensation in that setting are very low. (more…)