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Summary: The author of this article came out of partial retirement to construct a novel bankruptcy plan for GM, which is what GM used. The normal route would

Summary: The author of this article came out of partial retirement to construct a novel bankruptcy plan for GM, which is what GM used. The normal route would be for GM to file bankruptcy and have the court approve a restructuring. This restructuring plan would be fought over by creditors, and GM would be "dead in the water" while this was happening and loose market share. The author asserts this would have been a death blow to the reorganized GM. The novel plan was to split GM into two companies, "OldCo" and "NewCo," either before or after filing for bankruptcy (the article was not very clear). NewCo would emerge from the bankruptcy as the new GM, and OldCo would be liquidated. The bankruptcy process would complete faster as the restructuring plan was already "set" by splitting into two companies. There was internal debate in GM about this plan. A more standard bankruptcy was also being prepared. The Obama administration, in providing funding to GM, decided for the NewCo/OldCo plan and also ousted the CEO of GM. This article is written by the author of the NewCo/OldCo plan, so it may be self-serving. The article spends more time describing the process of and drama around creating the plan than the details of the actual plan. [edit for clarity and typos]

mynameishere 13y ago
Thanks for the summary. As soon as I realized this was written by the guy who came up with the plan, with him trumpeting his great success, I stopped reading. Was there anything about how bondholders were robbed to pay off the union? Also: General Motors, the most important industrial company What the hell, Forbes? Good god, if GM hadn't existed, nothing would have changed. Ford or Chrysler or AMC or whoever would have filled their shoes. Big deal.
- mhurron 13y ago
  > What the hell, Forbes? It's not Forbes, at least not the Forbes anyone would have expected anything decent from. Whenever you see a Forbes url like forbes.com/sites/USERNAME/blah... you are just reading some guys blog on forbes.com I don't know that there is really any resembling research and an editor at Forbes any more.
  - thrownaway2424 13y ago
    It says right at the top of the article that it appeared in the print edition of Forbes.
- parasubvert 13y ago
  "What the hell, Forbes? Good god, if GM hadn't existed, nothing would have changed. Ford or Chrysler or AMC or whoever would have filled their shoes. Big deal." That's a very ignorant statement. General Motors and Alfred Sloan had a massive impact on the way that organizations were designed and managed for over 50 years - they were the first to ever systematically design and execute a managed, decentralized organization of that magnitude. Peter Drucker's 1946 classic "Concept of the Corporation" was the first major study of a large corporation (GM) and a deep analysis of the implications that the new "society of organizations" would have on our culture, politics, and lives. Sloan's "My Years at General Motors" in 1964 was a management treatise that was blueprint through at least the early 80s. Others would have filled their shoes, but history would be tremendously different.
- wikiburner 13y ago
  > Was there anything about how bondholders were robbed to pay off the union? I'm genuinely confused as to how this went unchallenged. Even if the bankruptcy of G.M. resulted in pennies on the dollar, those pennies still belonged to the share and debt holders, rather than their being arbitrarily wiped out by the government in order to benefit the union. Were there/Are there any lawsuits to address this?
  - skybrian 13y ago
    In a bankruptcy the shareholders get nothing. Debt comes before equity and the union is one of the creditors. (But in any case, the union is hardly the only beneficiary of keeping GM afloat; it's not zero-sum.)
    - wikiburner 13y ago
      Yep, misspoke, just debt holders. Shareholders usually receive nothing. Regarding societal benefit of the bailout, even with imminent domain, the government has to give the owners fair compensation. It can't simply step in and disregard rule of law and pick and choose its preferred winners. Keeping GM afloat in no way excuses the preferential treatment. The unions hardly took a haircut at all compared to the bondholders: http://online.wsj.com/news/articles/SB10001424052702303768104577462650268680454 http://online.wsj.com/news/articles/SB1000142405270230376810... http://online.wsj.com/news/articles/SB124105303238271343 http://online.wsj.com/news/articles/SB124105303238271343
monkeyspaw 13y ago
The summary is very much appreciated. I read the first two pages of the article, had barely gotten any real information other than the author's personal and biased experience. The whole thing felt very self serving and not very informative.

mynameishere 13y ago

Thanks for the summary. As soon as I realized this was written by the guy who came up with the plan, with him trumpeting his great success, I stopped reading. Was there anything about how bondholders were robbed to pay off the union? Also: General Motors, the most important industrial company What the hell, Forbes? Good god, if GM hadn't existed, nothing would have changed. Ford or Chrysler or AMC or whoever would have filled their shoes. Big deal.

mhurron 13y ago
> What the hell, Forbes? It's not Forbes, at least not the Forbes anyone would have expected anything decent from. Whenever you see a Forbes url like forbes.com/sites/USERNAME/blah... you are just reading some guys blog on forbes.com I don't know that there is really any resembling research and an editor at Forbes any more.
- thrownaway2424 13y ago
  It says right at the top of the article that it appeared in the print edition of Forbes.
parasubvert 13y ago
"What the hell, Forbes? Good god, if GM hadn't existed, nothing would have changed. Ford or Chrysler or AMC or whoever would have filled their shoes. Big deal." That's a very ignorant statement. General Motors and Alfred Sloan had a massive impact on the way that organizations were designed and managed for over 50 years - they were the first to ever systematically design and execute a managed, decentralized organization of that magnitude. Peter Drucker's 1946 classic "Concept of the Corporation" was the first major study of a large corporation (GM) and a deep analysis of the implications that the new "society of organizations" would have on our culture, politics, and lives. Sloan's "My Years at General Motors" in 1964 was a management treatise that was blueprint through at least the early 80s. Others would have filled their shoes, but history would be tremendously different.
wikiburner 13y ago
> Was there anything about how bondholders were robbed to pay off the union? I'm genuinely confused as to how this went unchallenged. Even if the bankruptcy of G.M. resulted in pennies on the dollar, those pennies still belonged to the share and debt holders, rather than their being arbitrarily wiped out by the government in order to benefit the union. Were there/Are there any lawsuits to address this?
- skybrian 13y ago
  In a bankruptcy the shareholders get nothing. Debt comes before equity and the union is one of the creditors. (But in any case, the union is hardly the only beneficiary of keeping GM afloat; it's not zero-sum.)
  - wikiburner 13y ago
    Yep, misspoke, just debt holders. Shareholders usually receive nothing. Regarding societal benefit of the bailout, even with imminent domain, the government has to give the owners fair compensation. It can't simply step in and disregard rule of law and pick and choose its preferred winners. Keeping GM afloat in no way excuses the preferential treatment. The unions hardly took a haircut at all compared to the bondholders: http://online.wsj.com/news/articles/SB10001424052702303768104577462650268680454 http://online.wsj.com/news/articles/SB1000142405270230376810... http://online.wsj.com/news/articles/SB124105303238271343 http://online.wsj.com/news/articles/SB124105303238271343

monkeyspaw 13y ago

The summary is very much appreciated. I read the first two pages of the article, had barely gotten any real information other than the author's personal and biased experience. The whole thing felt very self serving and not very informative.