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U.S. Gets Majority Stake in New GM
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"The only difference here is that you have the government playing the role of the vulture investor," Ross added. "They are the only ones willing to make this investment, so they're calling the shots."
A critical legal issue is whether the bondholders might be able to get more for their debt if the company were simply liquidated, the proceeds distributed among those with claims.
But administration officials say that the bondholders would receive even less for their investments if GM were liquidated. In that case, the company's other creditors, such as the government, would be paid off first, they note. Yesterday, it was announced that 54 percent of bondholders had approved the deal.
"By the time you finished liquidating GM, there would be nothing for them," an administration official said yesterday.
The Chrysler bankruptcy has gone far faster than many in the industry had predicted. Obama administration officials say the case of GM, a much larger and more global company, will probably take longer.
GM will close 11 factories and idle another three.
The president plans to speak this morning about the automaker's prospects, perhaps echoing a former GM president, who during his confirmation hearings to become defense secretary in the 1950s, testified that he saw little difference between the national interest and GM's.
"For the better part of a century, The General Motors Corporation has been one of the most recognizable and largest businesses in the world," the Obama administration said in a statement released last night. Monday "will rank as another historic day for the company -- the end of an old General Motors, and the beginning of a new one."
Staff writer Dana Hedgpeth contributed to this report.
