(H/T – Ed Morrissey)
USA Today reports that Government Motors shut down the proposed stock-for-bonds buyout plan it had been offering, and will not be honoring any of the exchange offers accepted by the few bondholders that did accept the plan. GM had been offering 225 shares in the “new” GM for each $1,000 in bonds, and had all of the bondholders, which held $27 billion in bonds, accepted, they would have received a total of 10% stake in the “new” GM. One of the conditions the Obama administration set for receiving new taxpayer financing outside of bankruptcy court had been to get those holding at least 90% of the debt to agree.
Given that the current version of the reorganization plan had envisioned 10% of the “new” GM going to those bondholders, with the UAW eventually taking 20% and the government taking 70%, the question is who will get the 10% that was slated to go to the bondholders?