GM 363 Sale - Objections Due June 19 5:00 PM EST

Some excerpts:

B. THE SALE HEARING The Sale Hearing will be held before the Honorable Robert E. Gerber, United States Bankruptcy Judge, in Courtroom 621 of the United States Bankruptcy Court for the Southern District of New York, One Bowling Green, New York, New York 10004-1408, on June 30, 2009, at 9:45 a.m. (Eastern Time). The Sale Hearing may be adjourned without notice by an announcement of the adjourned date at the Sale Hearing.

RESPONSES OR OBJECTIONS, IF ANY, TO THE RELIEF SOUGHT IN THE MOTION SHALL BE FILED with the Clerk of the Bankruptcy Court and served upon:
(a) Weil, Gotshal & Manges LLP, attorneys for the Debtors, 767 Fifth Avenue, New York, New York 10153 (Attn: Harvey R. Miller, Esq., Stephen Karotkin, Esq., and Joseph H. Smolinsky, Esq.); (b) Cadwalader, Wickersham & Taft LLP, attorneys for the Purchaser, One World Financial Center, New York, New York 10281 (Attn: John J. Rapisardi, Esq.); (c) the attorneys for the Creditors Committee; (d) Cleary Gottlieb Steen & Hamilton LLP, the attorneys for the UAW, One Liberty Plaza, New York, New York 10006 (Attn: James L. Bromley, Esq.); (e) Cohen, Weiss and Simon LLP, the attorneys for the UAW, 330 W. 42nd Street, New York, New York 10036 (Attn: Babette Ceccotti, Esq.); (f) Vedder Price, P.C., attorneys for Export Development Canada, 1633 Broadway, 47th Floor, New York, New York 10019 (Attn: Michael J. Edelman, Esq. and Michael L. Schein, Esq.); (g) the Office of the United States Trustee for the Southern District of New York (Attn: Diana G. Adams, Esq.), 33 Whitehall Street, 21st Floor, New York, New York 10004; and (h) the U.S. Attorney’s Office, S.D.N.Y., 86 Chambers Street, Third Floor, New York, New York 10007 (Attn: David S. Jones, Esq. and Matthew L. Schwartz, Esq.), SO AS TO BE RECEIVED NO LATER THAN JUNE 19, 2009, AT 5:00 P.M. (EASTERN TIME) (the “Objection Deadline”).

The failure of any person or entity to file a response or objection on or before the Objection Deadline shall be deemed a consent to the 363 Transaction and the other relief requested in the Motion, and shall bar the assertion, at the Sale Hearing or thereafter, of any objection to the Sale Procedures, the Motion, the 363 Transaction, the approval of the UAW Retiree Settlement Agreement, and the Debtors’ consummation of the 363 Transaction.

See the link for full document:
http://gmcourtdocs.gardencitygroup.com/pdflib/salehearing_1.pdf

So next week we should be a huge fully of objections to the sale being filed from various parties.

June 23 Hearing - F and D Bondholders

June 23, 2009 at 2 p.m. (Eastern Time)
Motion to Appoint Official Committee of Family & Dissident Bondholders

http://gmcourtdocs.com/hearings.php3

GM CDS valued at around $0.125 in 2nd auction

June 12 (Bloomberg) -- Credit-default swaps traders settling contracts that protected against a General Motors Corp. default set a value of 12.5 cents on the dollar for the automaker’s bonds.
The price, the result of a second round of an auction by 13 dealers including Deutsche Bank AG and Morgan Stanley, means sellers of the swaps will pay 87.5 cents on the dollar to buyers of the protection, according to data from administrators Markit Group Ltd. and broker Creditex Group Inc.

http://www.bloomberg.com/apps/news?pid=20601103&sid=aZGopZRF4xcg


Soros: Ban CDS as 'Instruments of Destruction'

But the potential damage that CDS could do was not limited to financial firms, Soros added. He pointed to the bankruptcy of North America's largest newsprint maker, AbitibiBowater Inc and the bankruptcy of General Motors.

"In both cases, some bondholders owned CDS and they stood to gain more by bankruptcy than by reorganisation." See the entire article at:
http://www.foxbusiness.com/story/markets/industries/finance/update--ban-cds-instruments-destruction---soros/

GM CDS (Credit Default Swap) Auction June 12

Dealers buy and sell bonds of the defaulting companies during the auction in order to set one price by which holders of the derivatives settle. Sellers of the contracts, which are used to hedge against losses or speculate on creditworthiness, pay the buyer face value, less the value of the underlying bonds.

The settlement will be the largest for the market since last year’s collapse of Lehman Brothers Holdings Inc.

Banks, hedge funds, insurance companies and other investors had bought or sold a net $2.31 billion of default protection on the automaker’s debt as of May 27, according to data from the Depository Trust & Clearing Corp., which runs a central registry that captures most trades. Another $776 million was bought through contracts on indexes that include GM, the largest U.S. automaker, among groups of companies, New York-based Depository Trust’s data show.

Wow, imagine that....banks, hedge funds and insurance companies buy default protection which pays them full value of their bonds IF AND ONLY IF THERE IS A DEFAULT ON THE BONDS WHICH OCCURS WITH A BANKRUPTCY FILING! IF my math is correct..$2,310,000,000 + $776,000,000 = $3,086,000,000. OK have to use a calculator for this one......$3,086,000,000 (total CDS)/27,200,000,0000 (total bonds)=11.3%. Hummmm.....The original tender offer for the bonds had a mandatory 90% tender rate. Well with 11.3% getting paid in full how could they have ever gotten 90%, even if the terms were fair?

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=auMORpVwbZus

Stay tuned lets see what value the market makers place on GM bonds at the CDS Auction June 12.

Forgotten Voices in GM want to be heard

"But the unofficial group of dissident bondholders, represented by Patton Boggs LLP, said all bondholders should receive a higher recovery under bankruptcy's absolute priority rule and questioned whether the 54% tally of supporting bondholders (based on e-mail and telephone calls) is accurate.

"While such an 'agreement' has been touted as a template for all bondholders -- including holders of billions of dollars' worth who have not yet been heard from -- and is now embedded in the transfer of assets scheme ... there are significant questions well beyond whether it is really supported even by a majority" of the bondholders, the group said in its request to become an official committee. See the entire article at:

http://www.thedeal.com/dealscape/2009/06/forgotten_voices_in_gm_want_to.php

Lawyer Who Slowed Chrysler Deal May Take On GM

Tom Lauria who took the Chrysler-Fiat deal to the Supreme Court, may be gearing up for round 2.

The Wall Street Journal reports, "A hodgepodge of General Motors Corp. bondholders have asked him to represent them in a challenge to GM's bankruptcy filing." according to the Journal, Lauria "hasn't formally accepted the job, but before the ruling Tuesday, he said from his home base in Miami, ‘I must admit, I am enjoying the heck out of this.'"

http://online.wsj.com/article/SB124459032127399999.html

I think we will see a firestorm of objections filed opposing the government mandated fleecing of GM Bondholders prior to the June 19, 2009 filing deadline.

Glenn Kurtz and Thomas Lauria of White & Case
"According to Kurtz, what was going on was an unprecedented suspension of bankruptcy rules. And those same issues will likely be raised in the GM bankruptcy, where Kurtz and Lauria will likely have a role. "I think we can be assured that GM will rely heavily on the blueprint that was used in the Chrysler case," he said. "One of the e-mails that was produced in the Chrysler litigation specifically noted that Treasury was viewing Chrysler as a guinea pig...for GM."

http://www.law.com/jsp/tal/digestTAL.jsp?id=1202431408890&Glenn_Kurtz_and_Thomas_Lauria_of_White__Case

GM Bankruptcy May be Next Up at Supreme Court

GM could face legal objections on several fronts. Bloomberg reports, "GM creditors face a June 19 deadline to oppose a plan to create a streamlined company with trimmed debt and wage costs." New York attorney Michael Richman, who has been retained by a small group of individual GM investors to consider action, told Bloomberg "GM is completely different from Chrysler on the essential facts, and the Supreme Court made no decision other than to reject the appeal in Chrysler, so it has no precedential effect on our situation."

See the article in US News at:
http://usnews.rankingsandreviews.com/cars-trucks/daily-news/090611-GM-Bankruptcy-May-be-Next-Up-at-Supreme-Court-/

Court Won’t Expedite Hearing For GM Bondholders

Law360, New York (June 10, 2009) -- A federal bankruptcy judge has refused to hold an expedited hearing on a motion by individual General Motors Corp. bondholders asking the court to appoint an official committee representing family and other non-institutional bondholders.

Judge Robert E. Gerber of the U.S. Bankruptcy Court for the Southern District of New York on Tuesday denied a bid by an unofficial committee of three bondholders.

See article: http://www.law360.com/registrations/user_registration?article_id=105660&concurrency_check=false

See Document with handwritten denial at top.
http://gmcourtdocs.gardencitygroup.com/pdflib/576_50026.pdf

Endorsed Order signed on 6/9/2009 re: Expedited Hearing on the Motion for an Order Directing the United States Trustee to Appoint an Official Committee of Family & Dissident GM Bondholders. Requesting an Order for Shortening Time Denied. (Hearing on Motion Directing the United States Trustee to Appoint an Official Committee of Family & Dissident GM Bondholders is Scheduled for 6/23/2009 at 2:00 PM) (related document(s) 552) (Blum, Helene) (Entered: 06/10/2009)

GM section 363 bankruptcy plan = stealth re-organization plan?

Is the GM section 363 bankruptcy plan really a stealth re-organization plan?

"The problem is that General Motors is a whole different case altogether. And I am not so sure the government is going to be successful here. Here’s why. While the Chrysler deal involved a sale of the principal assets, the GM bankruptcy looks more like a stealth re-organization which violates the spirit of section 363. Back in 2004, Daniel Glosband, a bankruptcy expert at the law firm Goodwin Proctor reflected on this issue at the site FindLaw." See the entire article at:

http://www.creditwritedowns.com/2009/06/is-the-gm-section-363-bankruptcy-plan-really-a-stealth-re-organization-plan.html

Request for official F and D GM Bondholder Committee

Individual General Motors Corp. bondholders, who say their interests are different from institutional holders who support the automaker’s plan to sell its best assets to a new GM, want to be represented by their own official committee in the company’s bankruptcy case. The group, which calls itself the Unofficial Committee of Family and Dissident GM Bondholders, includes three individuals with about $2.3 million in bonds, according to court papers filed today in U.S. Bankruptcy Court in New York.

See the entire article at:
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a_gv_z6Rs8oo

Read the Request for Official Committee Status 6/9/09

The filings are coming is fast and furious now that legal representation is in place. Read the filing what states the reasons why the "Family and Dissident GM Bondholders" should be granted official committee status to pursue their creditor claims against GM's and the unfair structure of the current GM bankruptcy plan.

http://gmcourtdocs.gardencitygroup.com/pdflib/553_50026.pdf

GM Baby Bondholders get legal representation

Just a few minutes ago Michael Richman of Pratton and Boggs LLC, filed court documents in the GM bankruptcy case to represent the unofficial committee of "Family and Dissident GM Bondholders". This is a group of individual, non-institutional bondholders who own GM retail, or "baby bonds". So far the group consists of 1,500 individuals and growing.....

http://gmcourtdocs.gardencitygroup.com/pdflib/516_50026.pdf

For more information go to http://www.mainstreetbondholders.com/

Chrysler BK Challenge Could Snag GM Restructuring

DETROIT (Dow Jones)--General Motors Corp.'s (GMGMQ) creditors, facing deep concessions in bankruptcy court, could be emboldened to seek better terms if Chrysler LLC's lenders succeed in their challenge.

The U.S. Supreme Court on Monday held up Chrysler's sale to Fiat SpA (FIATY) - a move the U.S. government has warned could lead to liquidation - at the request of several Indiana pension funds and consumer groups that opposed the transaction.

The opposition, if it succeeds, could bode poorly for GM in the midst of a parallel government-orchestrated Chapter 11 filling it hopes to complete no later than September.

http://online.wsj.com/article/BT-CO-20090609-709133.html

See Also:

http://mobile.baltimoresun.com/inf/infomo;JSESSIONID=8389085C9BEB3EAFC834.2583?view=top_stories_item&feed:a=balt_sun_1min&feed:c=topstories&feed:i=47400095&nopaging=1

and

http://newledger.com/2009/06/chryslers-speed-bump/

Shafting the bondholders -- even China gets it

From the China Economic Net...

"General Motors bondholders have to accept a parsimonious offer to exchange their loans for stock and warrants. But there is no escaping the long-term damage that has been inflicted on credit markets by the Barack Obama administration's attempts to reward the United Auto Workers, one of the US president's strongest supporters in the last election, while trampling decades of legal precedent regarding owners of corporate debt."

See the entire article at:

http://en.ce.cn/Business/Enterprise/200906/03/t20090603_19237103.shtml

The world understand what the Obama administration is typing to do even if those in the US are turning a blind eye to the situation.

Congressman Ron Paul on the GM Bankrutcy

"Political pressure, rather than the rule of law, is deciding how to divide up the remains of GM. The bondholders had billions in retirement savings invested in the company, and though they were entitled to nearly three times as much as the United Auto Workers, the bondholders were left with just a 10 percent stake compared to the union’s 17.5 percent stake. For their 60 percent stake, taxpayers have a future of constant bailouts to look forward to."

See the entire article at: http://www.dailypaul.com/node/95684

Big Wheels Keep on Rolling…Over Bondholders

"The United Auto Workers have scored another victory under the extremely favorable terms offered on government loans to a bankrupt GM. Meanwhile, bondholders and taxpayers are left holding the bag."

See the entire article by clicking below:

http://online.barrons.com/article/SB124425258013590915.html?mod=googlenews_barrons

Big Wheels Keep on Rolling…Over Bondholders
By ANDREW BARY
The United Auto Workers have scored another victory under the extremely favorable terms offered on government loans to a bankrupt GM. Meanwhile, bondholders and taxpayers are left holding the bag.

THE POLITICALLY POWERFUL united Auto Workers emerged with an exceptionally sweet deal in the proposed reorganization of a bankrupt General Motors -- and the taxpayer essentially is footing the bill.

The federal government may be lucky to get back half of the $50 billion owed by GM (ticker: GMGMQ), consisting of nearly $20 billion of existing loans and about $30 billion that Uncle Sam plans to extend through so-called debtor-in-possession financing in bankruptcy. ("Uncle Sam's GM Follies")

The government effectively is making a gift to the UAW, because it is converting about $40 billion of its GM loans that are senior to the UAW claims into a 61% equity stake in the new company, making its recovery highly dependent on the new GM's equity value.

With Wall Street anticipating a $24 billion market value for the retooled GM, the government loans would be valued at about 50 cents on the dollar, after factoring in the $8.8 billion of new GM debt and preferred that Uncle Sam will get. For the government to come out whole, GM's equity value would have to approach $70 billion -- a very unlikely outcome. Ford (F) and BMW (BMW.Germany), arguably stronger companies, each have market values of $20 billion.

The Obama administration's willingness to move from a position as a secured lender to an equity holder in GM will let GM reduce its total debt to $17 billion from more than $50 billion. While financial details are sketchy, GM could emerge from bankruptcy with a strong balance sheet, $20 billion of cash and no net debt, according to a report by JPMorgan auto analyst Himanshu Patel.
As it did in the Chrysler bankruptcy last month, the UAW pulled off a coup, because it probably will emerge with 60 cents to 70 cents on the dollar for its $20 billion claim for post-retirement health care for its members. It will get $9 billion of new debt and preferred stock, plus a 17.5% equity stake.

Another group that does well: banks owed about $6 billion by GM. They are expected to be paid in full from the government's fresh loan of $30 billion to a bankrupt GM. In contrast, Chrysler's bank lenders probably will get just 29 cents on the dollar in a deal orchestrated by the administration.
The biggest losers: the bondholders who own $27 billion of unsecured debt, including many individuals. They are to receive a 10% stake in the new GM, plus warrants to buy an additional 15%.

The new deal, while less punitive than GM's original offer in April, may result in a recovery of little more than 15 cents on the dollar for the bondholders, according to analysis by CreditSights. This suggests little upside potential to the General Motors debt, which was trading at about 12 cents on the dollar last week. Assuming GM has an equity value of $24 billion, bondholders would get $2.4 billion in equity, plus warrants for 15% of GM, worth at least $700 million.
Investors enamored of the auto industry probably would do better with common stock or debt of Ford or shares of strong foreign car makers like Daimler (DAI), BMW, Honda (HMC) and Toyota (TM).

The exchange-traded GM debt, including convertibles (formerly tickers GBM and GPM) with a $25 face value, were suspended from trading on the New York Stock Exchange, and will be delisted, along with GM's shares. These convertibles, and other former NYSE-listed debt, likely will soon start trading over-the-counter.

It is galling to many bondholders that they are getting so little, relative to the UAW, for a similar legal claim, but the Obama administration played favorites, just as it did with Chrysler, and the unions got preference. No matter that much of the proceeds from the $27 billion of debt sold by General Motors went directly into the UAW employee-benefit plans.

In helping to shape General Motors' bankruptcy, the president seems to have played favorites.
"The UAW gets a recovery of five times the bondholders' under reasonably upbeat scenarios." wrote analysts at CreditSights last week. "This is just the fact. Let's see if anyone in Washington or too many media outlets will make the simple statement. The willingness of the Treasury to face the likelihood of eating a major loss down the line to get this deal done in what is still a very UAW-friendly and lopsided deal only partly eases the pain for bondholders."

No wonder the UAW could boast: "For our active members, these tentative changes mean no loss in your hourly base, no reduction in your health care and no reduction in pensions." This is an impressive accomplishment for an organization that faced disaster in a less favorable bankruptcy scenario.

In fact, never has an American union done so well at the expense of shareholders and creditors.