GM Restructuring Meets Opposition

"A group of General Motors Corp. bondholders moved to block the auto maker's bankruptcy restructuring on Friday, saying the plan discriminates against them in favor of other creditors.The group, which aims to represent small individual GM bondholders, said the auto maker's proposed overhaul, orchestrated by the U.S. government, gives a disproportionate recovery to the United Auto Workers union at their expense." See the WSJ article at:

http://online.wsj.com/article/SB124544333400432269.html

NEW YORK (AP) — A group of General Motors Corp. bondholders and some of the automaker's labor unions filed objections Friday to GM's plan to sell its assets to a new company that can emerge from bankruptcy protection.
Their opposition, along with additional objections filed by consumer groups, a handful of states and cities, and individual retirees, shareholders and bondholders, threatens to put the brakes on what has so far been a speedy trip through the Chapter 11 process.

The Unofficial Committee of Family & Dissident GM Bondholders claim they are being treated unfairly compared with the automaker's other stakeholders and deserve more than the 10 percent stake in the new company that they would receive if the sale goes through.
In its motion, the bondholders group accused GM and the U.S. government of unjustly speeding the case through the bankruptcy process at the expense of the bondholders and dividing the new company's assets "among a few select favored classes." See the entire Associated Press article at:

http://www.google.com/hostednews/ap/article/ALeqM5jDHyGHqjGfzLJa_eRhwViUGCwazgD98U128G0

Small Bondholder Attorneys file objections June 19

OK, some of you folks were getting nervous that the big guns were not ready to fire. I had assumed ("speculated" J) that the major objections would be today, as the deadline is June 19, 2009 at 5:00 PM. The filing is on behalf of the "Unofficial Committee of Family and Dissident GM Bondholders". Very interesting read...here is the original filing from just moments ago.....

http://gmcourtdocs.gardencitygroup.com/pdflib/1969_50026.pdf

Interesting the next document filed, Doc. No. 1970, was filed by the U.S. Trustee objection to the motion that the "Unofficially Committee of Family and Dissident GM Bondholders" not be granted official status. GM and the government are fighting with all they have not to allow the small GM bondholders a voice. Hearing is June 23, 9:45 AM.

http://gmcourtdocs.gardencitygroup.com/pdflib/1970_50026.pdf

Mom and Pop trip up GM restruturing

The Chapter 11 proceedings of General Motors Corp. has hit a speed bump with bondholders -- but not from the hedge funds or pension funds that hold millions of dollars in its bonds. Instead the bankrupt carmaker faces off against a Connecticut accounting professor and his wife who hold $400,000 of GM's bonds...

GM had been doing a good job of neutralizing dissident bondholder groups until May, when the Main Street Bondholders Coalition, which advocates for the rights of GM's thousands of small bondholders, rejected the company's restructuring plan and began pressing Congress to get involved on behalf of individual investors. Additionally an unofficial committee calling themselves "family and dissident GM bondholders" on June 11 sought designation as a formal committee, arguing in a court filing that "there are significant questions about the economic realities" of GM's bankruptcy plan.

See the entire article at:
http://www.thedeal.com/dealscape/2009/06/gm_bondholders_dissidents_bank.php

GM Attorney Wastes No Time in Fighting F andD Committee

The attorneys for GM wasted no time in filing their objections to recognizing the "Unofficial Family and Dissident GM Bondholders" as a official creditors committee. The hearing is scheduled for June 23 at 9:45 AM.

http://gmcourtdocs.gardencitygroup.com/pdflib/1805_50026.pdf

In my humble opinion the debtor's arguments are weak and not of significant merit. They misconceive the principles of the law. ( I sound so legal). We shall see what the Honorable Judge Gerber has to say on Tuesday, June 23rd. I am guardedly optimistic the F and D GM Bondholders will become an Official Committee. That's just "speculation" of course and I could be incorrect. For the folks following this saga I hope you feel the sarcasm every time I use the word "speculate or speculation".

US District Bankrucptcy Judge repeals reorganization plan

This very important article just came out. It's the second article on the link below. The Bankruptcy plan for New Century Financial, at one time the second largest sub prime lender in the U.S., was set aside on appeal. There were two faults but the second was, which has a bearing on the GM Bankruptcy is highlighted below. U.S. District Judge Sue L. Robinson indicated:

"Robinson also determined that the plan didn’t treat all similarly situated creditors equally and thus failed the test proscribing improper discrimination."

It is the same principle the individual Bondholders have been saying all along. The bankruptcy law treats equal creditors in a similar fashion.

http://www.bloomberg.com/apps/news?pid=conewsstory&tkr=MSFT:US&sid=a57754lDZwro

GM Has Its Dissident Bondholders, Too

"A group of smaller General Motors bondholders is trying to make itself heard in GM’s bankruptcy case, arguing that the big, institutional bondholders that dominate an official committee of bondholders aren’t representing the interests of small investors."

"The GM group calls itself the “Unofficial Committee of Family & Dissident GM Bondholders.” Over GM’s objections, the group of dissident GM bondholders won a hearing scheduled for June 23, essentially to change the “Unofficial” part of the name to “Official.” As an official committee, the group would have a role in planning GM’s reorganization.

http://industry.bnet.com/auto/10001726/gm-has-its-dissident-bondholders-too/

"Informal Noteholder Group"

I am wondering (OK, "speculating") what is going through the minds of the "institutional" bondholders or note holders as they sometimes refer to themselves. If I was in the position to lose say $500 million I'd be a bit more upset that I am now. Well its seems, that a group of institutional bondholders formed an "Informal Noteholder Group", as a break away from the Ad Hoc Committee which did the negotiations with GM prior to the Bankruptcy. If you have been following the saga you remember the Ad Hoc Committee, representing 20% of the 27.2 billion unsecured creditors. They resoundly rejected the first offer where only 15% of the bondholders approved, then reportedly approved a sweetened deal where a report 55% of the bondholders approved. Well, maybe, those details aren't quite correct .... OK I'm Speculating. A group of five (four initially, then a fifth jumped in) institutional bondholders formed the "Informal Note holder Group" with legal representation by the law firm Paul Weiss.

They have filed documents with the bankruptcy Court. Here are some interesting excepts:

Paul Weiss represents the following parties in interest in their capacities as members of an informal group of holders of certain unsecured notes issued by General Motors (the "Unsecured Notes"), or as managers or advisors to such holders, (collectively, the "Informal Noteholder Group"): Franklin Templeton Investments, Marathon Asset Management, on behalf of certain Funds and Accounts on behalf of certain Funds and Accounts One Franklin Parkway One Bryant Park, 38th Floor San Mateo, California 94403 New York, New York 10036

JMG Capital Management, LLC Eastbourne Capital Management, LLC, on behalf of certain Funds and Accounts on behalf of certain Funds and Accounts 11601 Wilshire Blvd., Suite 2180 1101 Fifth Avenue, Suite 370 Los Angeles, CA 90025 San Rafael CA 94901

The individual members of the Informal Noteholder Group collectively hold approximately $1.6 billion of the Unsecured Notes. Each of the members of the Informal Noteholder Group was a member of the larger Ad-Hoc GM Noteholders Group, which was formed in December 2008. 3. The Informal Noteholder Group has retained Paul Weiss to represent their respective interests in connection with the above-captioned cases.

http://gmcourtdocs.gardencitygroup.com/pdflib/118_50026.pdf (Doc. No 118, filed June 1, 2009)

See the following Document when Western Asset Management was added to the group.

http://gmcourtdocs.gardencitygroup.com/pdflib/316_50026.pdf (Doc. No. 316, filed June 3, 2009)

It will be very interesting to see if they are there to objection to the bondholder deal or to add support to it. I think we will know by the Friday, June 19th filing deadline. This group has $1.6 billion plus the Western Asset Management share which is unknown. This at a minimum represents 6% of the outstanding unsecured bonds.

General Motors' bankruptcy hammers individuals

Major financial institutions weren't the only ones to loan money to General Motors Corp. before the federal government stepped in. Mom and pop investors bought about 20 percent of the bonds sold by the automaker before it filed for bankruptcy.

"The major brokerage firms for a long time pushed GM paper. It was well-rated, and returns were high," said Frankola. "Two years ago, everybody was looking at yields. But two years ago, no one thought GM would be falling into bankruptcy now."

See the article at:
http://www.pittsburghlive.com/x/pittsburghtrib/business/s_629973.html

GM retirees tried to play it safe

The Washington Times GM Bondholders Series, June 18 The Bondholders -- Part 4

"Bondholders thought their retirement dreams were safe. After all, they had bought bonds, not stocks. "

"While the stock market is where many investors take risks to haul in lots of money, the bond market tends to attract people who want to preserve their wealth. Bondholders get their money back along with periodic interest payments (the yield) - or at least they're supposed to. "

"While they generally don't reap double-digit gains as some stockholders do, bondholders can expect a steady stream of income from the interest payments as well as a lump sum of money when their bonds mature. "

See the entire article at:
http://washingtontimes.com/news/2009/jun/18/retirees-tried-to-play-it-safe/

Speculation costs GM investors hefty price

Call them the unlikely speculators.

Mechanics, educators, engineers of modest means. These are among the roughly 100,000 people who own General Motors Corp. bonds. Some bought the bonds before they were downgraded to junk status yet decided to hang on to them. Others went in with eyes open, buying at a substantial discount to the bonds' face value, betting the company wouldn't crater and their gamble would eventually pay off.

Speculation was what they did, whether they like the term or not.

http://www.washingtontimes.com/news/2009/jun/17/gm-investors-pay-hefty-price-for-speculation/

This is the continuation of a Series of articles in the Washington Times concerning GM Bondholders. Although I think the articles are for the most part well done, I took exception to the term "Speculator" used in the title. But then, I gave it some thought and "Speculator" wasn't a nasty or derogatory term until Mr. Obama made it one when he referred to Chrysler bondholders as "Speculators". Anything in the future, whether its getting out of bed in the morning, eating a piece of fruit or making an investment involves some degree of "speculation" as to the outcome in the future. We base our judgement on our past experience, laws in place or other known factors in making our decisions. When someone comes in and changes the rules or circumvents the law, I think a better term is "victim" rather than "speculator".

Where is Tom Lauria of White and Case in GM fight?

From an article published June 10, 2009 following the denial of the Supreme Court to hear the merits of the Chrysler-Fiat sale. Tom Lauria was the spearhead for the dissident bondholders of Chrysler and was thought to play a major role in the dissident bondholders in the GM Bankruptcy. With 45% of the $27.2 billion rejecting the GM/Government bankruptcy package Mr. Lauria will have a large pool of dissent clients from which to choose to represent. So why haven't we heard from Mr. Lauria as of yet concerning the GM Bankruptcy case? My off the wall guess is he is shopping for the best dissident bondholder client(s), whether institutional or non-institutional, with the most compelling merits of their case. I think we will know by 5 PM Friday, June 19th when the objections to the 363 Sale of the GM assets are due to be filed with the Bankruptcy court. Let's wait and see.....

Some excerpts from the WSJ article of June 10.....

"A hodgepodge of GM bondholders have asked him to represent them in a challenge to GM’s bankruptcy filing."

"As for Lauria, he’s chagrined by more than just the outcome of the Chrysler/Fiat situation. He says his experiences of the last month “cause me to worry that there is something very wrong with the system,” and he says he wonders “whether our judiciary is today able to fulfill its constitutional mission to ensure that the rule of law prevails — particularly in the face of perceived crisis."

See the article at:
http://blogs.wsj.com/law/2009/06/10/the-lawyer-of-the-hour-white-cases-overly-tenacious-tom-lauria/

I can't imagine Mr. Lauria not participating in the GM Bankruptcy fight, as this presents a unique opportunity to bring the merits of a strong case against the GM/Task force actions in front of the Supreme Court should the lower courts not redistribute the ownership of the new GM based on existing bankruptcy law. Just a thought.....

GM workers trusted investment in product

"GM's fallen fortunes, therefore, were doubly painful to the company's employees who doubled as bondholders." See the profiles of GM retirees who are also GM Bondholders at:

http://washingtontimes.com/news/2009/jun/16/gm-workers-trusted-investment-in-product/

Patton Boggs Lawyer Takes Turn For Dissident GM Bondholders

While GM's institutional bondholders are supporting the asset sale, Richman worries that many of the automaker's individuals bondholders are getting left in the lurch.

"Our position is they can spin the assets off--that's done all the time in bankruptcy cases, there's nothing remarkable about it--but determining who owns it and in what proportions should be done in accordance with the law," he says. "The bankruptcy code has very specific protections and requirements for how you confirm a plan."

It's hiding the reorganization plan under the guise of a bankruptcy sale that angers Richman, who feels his clients are being dictated to by larger parties with a vested equity interest in a new GM free from liabilities.

See the entire article at:

http://amlawdaily.typepad.com/amlawdaily/2009/06/patton-boggs-michael-richman-gm.html


GM Dissident Bondholders Pick Patton Boggs over White & Case
See Also:

http://www.law.com/jsp/tal/digestTAL.jsp?id=1202431485864&GM_Dissident_Bondholders_Pick_Patton_Boggs_over_White__Case

Washington Times Series GM Bondholders, June 15

An excellent series by the Washington Times on GM Bondholders

"Plenty of GM's bondholders are Wall Street types. Most of the company's $27 billion in private debt is held by investment firms. But many of those firms are actually managing the money of individual investors. And fully 20 percent of the bonds are owned personally by roughly 100,000 mom-and-pop investors across the country, according to Main Street Bondholders, a group organized to lobby on their behalf. "

"Paralegals, pilots, small-business owners and lots and lots of retirees have poured their life savings into the bonds of GM, once a blue-chip company so blue that it was considered safe for widows and orphans to own."

GM's deal erased many average Americans' savings
http://washingtontimes.com/news/2009/jun/15/gms-deal-erased-many-average-americans-savings/?feat=home_cube_position1

See Who the are, what they lost .....
http://washingtontimes.com/news/2009/jun/15/bondholders/?feat=article_related_stories