GM Loses Bankruptcy Shield - Could Mean Billions In Liability Payments

[CCPcoatings]

 

Ah, so that's why you believe everything you see on TV? 60 Minutes is a drama show, just enough "facts" to make it believable. Did I seriously need to explain that to you?

 

I probably also have to explain to you that GM is not going to suffer here. The market and the tax payer will suffer. Just become some people can't accept their own faults.

 

 

Obviously, since your comments were unintelligible. First off, I don’t recall saying I believed anything because it was or wasn’t on TV. Nor are any facts nullified as a result of being highlighted on a “dramatized” show. Second, I clearly noted that I was unsure of my exact source in that I viewed it over two years ago. My only recollection was that it was formatted in a 60 minutes type format. As it turns out it was actually CNBC, which is irrelevant either way.

 

Perhaps you could share with us how a forensic engineer and an attorney with two different ignition switches, both bearing the SAME part number , yet clearly having DIFFERENT parts installed could “drama-tize” away the factual reality of their existence? Also, PLEASE elaborate as to WHY, either CNBC, the engineer or attorneys for the victims would make actionable, libelous accusations against GM on a prime time “Drama- show” if said parts didn’t exist?

 

As to GM's fate, I could care less either way. Hopefully all is well since their HQ is a mere 4 miles away and I get great deals on their vehicles. In that you somehow think that numerous "dead people" should simply "accept their own faults" tells me that any in depth explanation you could provide would surely lack any relevancy. I can only hope that your next drive includes a small anvil on your key chain.

[Doug_Scott]

 

 

EXACTLY. A middle school CHILD could understand this simple math, yet here we are, because YOU’RE still struggling with it. It’s not possible to dumb this down any FURTHER. Don’t you have a small child or relative you can have explain this to you??????..

 

You are CORRECT:

 

“They are being allowed to NOT pay taxes on future earnings - earnings that haven't even happened yet”

 

Despite writing this, you obviously have no idea what it means. This does NOT mean that GM does not have to pay taxes on future earnings, you moron!!!! IT MEANS THAT THEY ARE ABLE TO OFFSET FUTURE EARNINGS WITH THEIR OLD DEBT!!!!!! Just as YOU, me, APPLE, Ford, Dodge and your next door neighbor CAN do…….. You ALWAYS offset future earnings with past debt. I assume you file taxes every year. What the hell do you think you’re doing every time you make use of tax deductions????? You’re offsetting your future income with previous expenses / debt.

 

So AGAIN, what THIS MEANS is:

 

If NEW GM has outstanding debt of 50 billion spanning from 2008-2016, AND they have earnings of 100 billion in 2016, they can reduce their net profits / taxable income for 2016 by a portion of that 50 billion in outstanding debt. SO:

 

100 billion – 10 billion (old debt) = NET Taxable Income of 90 BILLION for 2016

 

Based on the numbers above, they can reduce their taxable income by 10 billion for the next five years : 2016, 2017, 2018, 2019 and 2020.

 

Starting in 2021 that debt and ability to write it off is used up…..…..

 

Why do you ignore the corp restructure and bailout of GM? Are you saying that I can file for bankruptcy, get all my debts cleared off, then go ahead an use that prior to bailout debt to offset my future earnings? And everyone, and every company can do this? You seem to have discovered a huge loophole.

 

I think this may also be easier to understand if you think of the economy as being one huge wallet. One side will take money out for betterment of all mankind, other side will collect money for the other side to use. If all of a sudden there is 10 billion less coming in, the first effect is that the other side is now unable to spend 10 billion. That creates panic, so they up taxes to get that income back. To me that means that by definition, the TAXPAYER must make up the missing 10 billion. It may not be today, or tomorrow, but it will happen.

[CCPcoatings]

 

Why do you ignore the corp restructure and bailout of GM? Are you saying that I can file for bankruptcy, get all my debts cleared off, then go ahead an use that prior to bailout debt to offset my future earnings? And everyone, and every company can do this? You seem to have discovered a huge loophole.

 

I think this may also be easier to understand if you think of the economy as being one huge wallet. One side will take money out for betterment of all mankind, other side will collect money for the other side to use. If all of a sudden there is 10 billion less coming in, the first effect is that the other side is now unable to spend 10 billion. That creates panic, so they up taxes to get that income back. To me that means that by definition, the TAXPAYER must make up the missing 10 billion. It may not be today, or tomorrow, but it will happen.

 

 

I'm not ignoring GM's restructuring, nor am I making any moral judgments as to whether it should have been allowed or not. That wasn't the topic of discussion. Though being from Detroit and knowing the number of jobs it saved I clearly supported it. The ACTUAL topic of the discussion was to enlighten JSDIRT that GM, DOES in fact have to pay their taxes and that GM did NOT win the golden "Do not PAY YOUR TAXES award". As a result, it became glaringly obvious that he hasn't the slightest clue as to how YOU, I. or every business in America does their taxes every year. Further, I'm no genius, nor have I discovered any NEW loopholes. Me having to interpret the article for him and walk him through basic accounting is the equivalent of dunking on a small child. Its nothing to hang my hat on.

 

So to answer your question, YES. If you had a business that failed, "you and everyone and every company" could in fact walk away from your debt and creditors, or "clear them off" in your vernacular. Keep in mind this would be dictated by the type of bankruptcy you filed such as 7, 11, 13, etc. Prior to 2008 you would NOT be able to carry any debt from your old company to your new company, assuming there even was a new company. The reason for this is, in the eyes of the IRS and the courts your "bankrupt company" NO LONGER EXISTS. BUT, as we now all know from this not so well written article, TARP gave GM the ability to carry some portion of their debt forward to the new entity. I'm not familiar with all the specifics of TARP and have no idea how long these provision are available, but I can assure you that businesses are NOT clamoring to rush INTO bankruptcy so that that they can find a few more tax deductions. That's ridiculous.

 

I see where you're going with the hypothetical "wallet scenario", but in the business, it doesn't really play out that way. First off, "not getting" a particular amount or tax revenue is much different than "losing tax revenue". If you're remotely familiar with car companies you know they are very cyclical from year to year. One year they're making billions and the next they are losing billions. Even though GM may be benefiting from some additional tax deductions, I can assure you that they and every other big business doesn't have problems finding them elsewhere.

 

This is why every few years or so you here stories in the news about BIG business's paying little to no taxes. Every time a business invests, grows, expands, it creates tax deductions for the next 20 years......Even if GM didn't get to carry any of their bankruptcy debt over they would have NO problem finding some other debt to replace it. So the reality is that you were never going to see the hypothetical "10 billion" anyway. You would have been blissfully unaware of it......

[SnakeEyeSS]

 

The "they hid it" was speculation, based on hate and anger. Why would GM act when they also believe the problems to be owner caused? People do stupid things, and some pay dearly for them. Blaming others for our own stupidity is worse.

Maybe you haven't paid attention, but it is FACT they hid it, that's why they were fined!!!! There were many news stories on the emails that came out. Engineers testified of (I think some were even fired) because they said the design was bad and people will get hurt, one of the reasons Congrats passed that whistleblower bill! The emails backed it up. Mary Barra was even involved in one of the email chains. That's why it's so astonishing she survived the fallout.

 

https://www.washingtonpost.com/news/business/wp/2015/09/17/why-general-motors-900-million-fine-for-a-deadly-defect-is-just-a-slap-on-the-wrist/

[Nargg]

Maybe you haven't paid attention, but it is FACT they hid it, that's why they were fined!!!! There were many news stories on the emails that came out. Engineers testified of (I think some were even fired) because they said the design was bad and people will get hurt, one of the reasons Congrats passed that whistleblower bill! The emails backed it up. Mary Barra was even involved in one of the email chains. That's why it's so astonishing she survived the fallout.

 

https://www.washingtonpost.com/news/business/wp/2015/09/17/why-general-motors-900-million-fine-for-a-deadly-defect-is-just-a-slap-on-the-wrist/

 

You are not paying attention. I do not believe they felt as if they were hiding it, just took that route to keep legality simplified. They probably felt as I do, that it was more human error on the driver, not the OEM. I was taught in the 1970

s to not put too much weight on a key chain used in a car ignition. This is what caused this issue in my opinion. 100% No doubt. You, like others in the US, feel justified in blaming others for their own failures. This is why this country is having so many problems.

[pm26]

My wife has been driving our '86 Grand Marquis with mace, and 1,000 other things hanging off this 3 lb. chain for the past 13 years. 232k on the 30 year old car now, and the ignition (and lots of other parts) are still OEM and working fine.

 

GM chose to cheap out on the switch, so they should burn for it.

Remember those old GM ignition switches with "ears" on them which you turned instead of turning the key? At some point someone at GM suggested that they save money by removing this feature. Those old switches on 70's and 80's GM cars were a lot more sturdy and I have never heard of any issues with them. Serves GM right for being so cheap. Just how much money can you save by making an ignition switch cheaper?

 

People are people. No matter how many warnings you post in the owner's manual, some people will always ignore those warnings and have key rings with a lot of other keys on them. So the logical solution is to make the ignition switch sturdy enough to make it tolerant to increased weight. Or eliminate keyed ignition switches entirely and go to push button ignition.

[kstruckcountry]

You mean the eared ignitions that the keys fell out of or even could be started without the key when they were worn? [emoji38]

 

Sent from my SM-G920V using Tapatalk

[Jsdirt]

I had a few like that. Took a long time for them to reach that stage, though. My last one was over 20 years old before it started to turn without the key.

 

Our Marquis ignition has ears on it too. OEM too - never been changed. I do lube it occasionally.

 

Only thing I had to get into the column for was the shift lever spring. Lever was flopping all over one day. When I got in, I saw the OEM spring had separated into 8 pieces or so. Found a NOS one out in TX, and was shipped out for a reasonable price.

[Colossus]

I liked those as well. Sadly though, generally a pair of angled wide jawed pliers with enough force could crack and start those old type of ignitions.. (before the key security stuff)

[Jsdirt]

Yeah, someone did exactly that to my first '86 Grand Marquis when I was living in Phoenix. Car was gonzo when I got up in the morning. Just a pile of glass on the ground from the rear quarter window.

 

Thing was gone a full year before it showed up in an impound yard in Bell, CA. At the time I was living in Livermore, CA, so I took a bus from Oakland to E. LA at 1am to go retrieve it. That was an adventure, lemme tell ya ...

 

Paid the $500 in storage fees, then had to slide underneath the guy as he got out of the car, to keep a foot on the pedal - battery was flat dead. Car only ran on the alternator. Love those first FI cars. Anyway, made it out of that hellhole, and most of the way up the Grapevine - got off an exit, let my foot off the pedal to coast, and she stalled. That was it! At least I was out of the city.

 

A landscaping truck with about 30 Mexicans in the back pulled up behind me as I was trying to push the 2 ton car by myself - they all jumped out and helped me push. That was great. They had no room in the truck, so I had to walk a mile and a half to the auto parts store, then 1.5 back carrying the battery. Ate my crap McDonald's burger, threw the battery in, and made the 5 hour trek back to Livermore.

 

Spent the day cleaning the thing, and changed the year old oil, then put it in the want ad (had bought my '72 El Camino to replace it, and liked that car better). Ended up getting $1,250 for it, which paid for the impound fees, and gave me money for a U-Haul trailer, fuel, and a case of oil for the trek back to MA.