Chrysler and General Motors (GM) Bankruptcy?
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It will be interesting to see what the creditors for Chrysler do - if they agree to erase most of the debt that is currently on their balance sheet. Now, what will happen with GM?
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Solution Summary
This solution discusses the Chrysler case and what the creditors will do, if they agree to erase most of the debt that is currently on their balance sheet. It also discusses what will happen with General Motors (GM).
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1. It will be interesting to see what the creditors for Chrysler do - if they agree to erase most of the debt that is currently on their balance sheet.
The creditors have been asked to provide concessions concerning Chrysler: "It is now incumbent on the creditors, in particular those that have taken public funds, to make some concessions and be a part of the solution," Stabenow said (http://ca.reuters.com/article/topNews/idCAN2529726020090426?pageNumber=1&virtualBrandChannel=0). The debts that remain to be paid depends of the type of Bankruptcy (Chapter 7 or 11), at least in part.
A Chapter 11 bankruptcy determines the final negotiations between Chrysler and its creditors, with the Chapter 11 allowing reorganizing debts and paying creditors according to a specific plan agreed upon by the creditor and approved through the courts. These (perhaps the concession might be that the lenders get only 30% to 40% as determined by the courts) would still owe based on Bankruptcy law. Product lines will be dropped and other things will be part of the restructuring plan as well.
2. Now, what will happen with GM?
It would be very similar to Chryslers. GM would file a Chapter 11, and the company would reorganize ...
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