Monday, June 15, 2009, PM | 1 Comment
Well! I would have lost all my GM shares, had I owned some. But I didn’t own any, so I didn’t lose any. Is that a good logic? I mean if you don’t buy things, you don’t pay for things.
But sooner or later, you gotta buy something. I am glad that “something” I bought didn’t turn out to be GM shares.
Ask the good folks who had bought GM shares over the years. They probably thought they were perhaps buying into a piece of America. And they would be right. General Motors stood right there among the top best companies of the world.
The GM shareholders lost and they lost big. Some bankruptcy lawyers think that during Chapter 11 bankruptcy proceedings the company works toward repaying secured and unsecured creditors first. It is only when the debts owed to these creditors are fully realized that anything is doled out to shareholders, which in the case of GM, is highly unlikely given that its debts far outweigh its assets.
My lawyer friend added the last part – its debts far outweigh its assets – of the above statement. When you buy shares in any company, should you examine a statement like that. I mean really examine it. Would the shareholders have bought into GM if they had known about its debts far outweighed its assets? I think they would have. The reason is: “how many of us get down to the nitty gritty of a company’s finances in such details?” Not too many. At least I don’t.
Even the largest creditors to GM are likely to receive only a fraction of what they are owed. As part of the government’s plan to get GM back on its feet – and to help repay these creditors – equity in the “New GM” will be allocated to bondholders, the United Auto Workers health care fund and the U.S. and Canadian governments. Shareholders are not included in that plan.
In a Nutshell
Things look pretty bleak for GM shareholders. It’s doubtful that the shares will even retain any value as the company moves forward with its bankruptcy proceedings. Before you make any move – not the kind of move Robert Redford made as the Sundance Kid – even though in some shareholders’ mind, that might not be such a bad idea, consult your investment adviser about how to proceed and whether or not selling your shares will make sense.
Some Q&A regarding GM shareholders:
Will GM’s common stock be delisted from the New York Stock Exchange?
Yes. On June 2, 2009, the New York Stock Exchange (“NYSE”) informed GM that it is no longer suitable for listing on the NYSE.
How and when can I buy shares of the New GM?
The New GM will initially be owned by the U.S. Treasury, the UAW VEBA and certain creditors of the Old GM. Therefore, no shares are for sale to the public now.
Will I receive payments on any shares or canceled shares?
GM thinks it is unlikely that you will receive payment.
Why can’t stockholders file claims with the court?
Bankruptcy court will not allow it. The Bankruptcy Code is clear that stock is an “interest” and not a “claim.”
I am a bondholder, what impact does the filing have on me?
All parties, including bondholders, will be treated in accordance with the provisions of the U.S. Bankruptcy Code and the rulings of the Bankruptcy court.
Who can I contact with additional questions?
You would want to call 911 and report a burglary but stockholder or individual investor related inquiries contact 1-800-561-4182 or 1-732-512-3104.
- Jun 16, 2009: Lucky Luck » Lost all my GM shares | personal finances