GM Slumps, Bankruptcy Imminent Possibility

James | May 31, 2009 | Comments 3

With the government imposing on a restructuring deadline which is drawing near, General Motors (GM) still has no viable business plan prepared. This is creating fury among investors who believe that bankruptcy is imminent for General Motors if they wish to survive. This news has caused even more analysts to downgrade General Motors sending shares to record lows. Reports show that the company has n been very busy looking for a solution to this problem. After getting bondholders to accept an amended exchange offer, the company has ratified a national labor agreement with the United Auto Workers union. It will be a long journey before GM makes any sort of comeback. To be successful I believe the company needs to cut a of its brands and install a new team to properly manage and revive the company. One proposed plan in which I support is to launch a new separate company which will purchase all remaining “good assets” from GM. As for the bad assets they will be liquidated over the next several years as part of GM’s bankruptcy sale. This option would greatly reduce the size of GM’s company, yet currently is the only logical option as currently the company has no means in being able to sustain itself successfully for the next several years. As for investors within GM I would stay away. GM is still on shaky grounds with many unanswered questions. First I want to see a strong restructured business plan that provides a confident long-term outlook. They need a way to shed bad assets and keep good assets in hand which is why I applaud the plan mentioned as it will do that in a clear-cut format. I know I have been a basher of the American Auto Industry but I actually hope GM can make a successful comeback. The company has to have a new motto and build off next generation cars and move away from the large trucks and SUVs they have been producing the last several decades. GM needs to become a much smaller company as well. Part of their problems were they became so large, with so many weak links that when it all crashed it was to late to fix the problem. With proper management their is no reason that GM can’t make a stable comeback the question now would have to be when.

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