GM Gets Surgical

Doubt continues to grow on whether or not GM can avoid bankruptcy very soon. GM is backed into a corner with its well-heeled bond holders not budging and too many creditors clamoring for cash while the feds while away the hours on the doomsday clock.

People's jobs are at stake, to say nothing for Detroit prestige, and money is all that seems to matter to the bond holders who could save it all.

GM and others are pushing for a "surgical" bankruptcy that could put GM into bankruptcy court on a "preplanned" approach that would go into court with the intention of getting, in advance, the agreement of enough creditors to quickly pull livable pieces of the corporation out of bankruptcy and leave unprofitable pieces to their bankruptcy fate. The goal would be to get the profitable pieces out of court control in a matter of weeks.

But bankruptcy experts are saying it likely wouldn't be less than 6 months before bankruptcy court lets go of any pieces of the GM pie. A good example? The musings of many when Delphi was headed into bankruptcy court just before it filed in October 2005. It's still there.

GM wants its monied bond holders to cut two thirds of the debt by swapping bonds for GM shares but they aren't buying it. Given the recent trading history of GM stock, no one can blame them. A buck sixty eight a share in the afternoon of April 20, 2009. Whoddathunk?

None of this is shaking out too good for GM or Detroit. It won't be pretty for GM owners either. If your car is still covered by warranty, and you've got defects, better get it to the shop pretty soon, while dealers are still willing to honor the GM warranty. Once a bankruptcy is filed by GM, it's anyone's bet on what will happen next.


Chrysler-Fiat Iffy While GM Gets Gloomy and Saturn is Selling Out

Fiat has said that there's no better than a 50-50 chance they will work out a deal with Chrysler, which only has until the end of the month to get the deal done. Apparently Fiat has put some hard terms on the table that Chrysler may not be able to meet, including forcing some union concessions and participation that may be impossible.

Fiat has said that if their terms aren't met then they will walk out. Can you spell "bankruptcy" Chrysler?

And GM is having its troubles too, as the clock ticks toward its deadline. GM execs are openly talking about how to structure the bankruptcy now and even the "suits in the tower" are openly saying they are pessimistic about being able to avoid bankruptcy.

Crain, which knows Detroit's car makers better than anyone, reportedly has said that Chrysler is going to file bankruptcy in the coming weeks and that GM will follow before the end of May. Maybe. GM's stock price sure isn't anything to get excited about.

And Saturn? It looks to be going down the Chrysler road to outside ownership. Turns out that an investor group called Telesto Ventures is making a bid to buy Saturn from GM, and we all know how well that went for Chrysler when Daimler came to town. As part of the deal, they are reported to want GM to work with them to distribute vehicles for the next few years before they shift production elsewhere, reportedly overseas. Reportedly they intend to use the Saturn network to ultimately distribute cars and trucks made entirely by builders overseas. At the same time, GM is talking with its Saturn dealers about spinning Saturn off into an independent company if they have to, and if it'll work. Who knows where that's going . . . but Saturn's 384 US dealers are undoubtedly sweating.

Folks, if you've got a Chrysler or General Motors product with problems, now is the time to get it back to the dealer for warranty-covered repair work. If you've got a dispute with Chrysler or GM, or a lawsuit, you probably ought to think real hard about trying to get it settled and get money in your pocket while there is still money to be had.

Got a lemon car or lemon truck? Don't wait to get rid of it. If the dealer or manufacturer won't buy it back, call us. We've been getting rid of lemons since 1978. It's what we do.

Burdge Law Office
Because life is too short to put up with a bad car.


GM Default Likely, S&P Says

Standard & Poor, the people who rate the credit status of corporations, has cut GM's rating deeper into junk value because its assets are shrinking, sales are light and debt is not being reduced, according to S&P.

Although S&P predicts that a version of GM would be able to survive bankruptcy, the talk of it is becoming more frequent and more insistent, even inside GM itself.

"Should GM default or file for Chapter 11 bankruptcy protection, holders of its senior secured revolver should expect a 70 percent to 90 percent recovery of what they are owed instead of the previous expectation of 90 percent to 100 percent," S&P said in a recent Automotive News article.

The same article predicted that a Chapter 11 filing by Chrysler would likely be its death knell.

Meanwhile, if you've got a GM car or a Chrysler product with defects and it's still covered by warranty, you better get it back to your dealer for repairs while the factories are still honoring the warranties and all of this is just talk.

Burdge Law Office
Helping Consumers Protect Themselves Since 1978


Reinventing Our Wheels

The Spring 2009 issue of Good magazine is all about transportation and focuses on reinventing transportation in all its facets, with particular emphasis on cars and all things Detroit. You can't see it online yet so you'll have to go to the bookstore and pick one up if you don't subscribe.

There's a great article on alternative fuel cars with an equally great guide to the different types and their pick of the best.

Of course they cover the well known Tesla battery-powered juiced up sports car and the Prius and the coming Insight and lots more. But what catches the eye is the unusual articles too.

The 7 best biking cities are covered, along with the pro and con of some pretty sophisticated two wheelers. Flying cars are covered (the concept actually goes back decades to Henry Ford and his idea wasn't even the first), a fascinating study on the traffic pattern applications of ants (yes, the little critters who all travel at the same speed and always yield the right of way to two types of worker ants), the aptera gets a mention (a space age looking car that actually is on the road in California and set to roll out soon), and the story of Max Sparber, who's been using a personal jet pak to get around Minnesota since 2008 and who you can watch online by doing a search for "max jet pack" on Flickr or at

But the most amazing goes to a small panel article on page 88. There you'll find the amazing Indian Air Car. That's a story coming out of India's largest auto maker, Tata Motors, where they have created the world's first commercial car (well, really it looks like a small van) that runs on air. Right. Air. Well, actually it's compressed air. It's priced at just under $18,000 and an American version is slated for production with delivery in early 2010. It's call ZPM for Zero Pollution Motors and it is estimated that it'll run 1,000 miles on a single compressed air fill-up at speeds up to 96 mph.

The Indian Air Car is considered a front runner for the X Prize, a contest sponsored by the X Prize foundation that has $10 million on the table for a 100 mpg car that is mass produceable. We've talked about some of the cars that are in the running for the X Prize before, including the Aptera. But the Indian Air Car came out of nowhere.

By the way, this is a terrific magazine in general, costing only $20 to subscribe and they don't even keep the money. Instead they pass it on to any one of a number of "good" charities that they let you select from.
Burdge Law Office
Helping Consumers Protect Themselves Since 1978


Making Handbags to Survive

It's not all doom and gloom in the Rv industry. Some folks are making success out of disaster too.

While others in the industry are closing down and giving up, Goshen Indiana's Specialty Window Coverings, which makes window coverings for RVs, is digging its way out by making something totally different with millions of dollars worth of fabric they had in stock.

"Well, we lost a couple large customers and we sat around and tried to think of different ideas how to keep people working. "What can we do?" And one of the ideas was to make these bags," said Randy Ferrie, of Specialty Window Coverings.

Donna Gould, the company's sales manager said, "I had a carpet bag that a vendor had given me for a Christmas present and I had it on airplanes before and 'Where did you get that bag? I'd love to have that bag!' And so, it just started evolving from there."

With 200 employees laid off, some of the 30 employees left at Specialty Window Coverings started designing bags and making samples. They attach tags that say "Made in the USA" and "putting America back to work."

The company says they're selling great too. "They love the bags," said Woods. "The bags sell themselves when they see the quality of the product. But when they find out the plight of this company and the need, everybody knows we're the RV industry, they are just willing to help and get on board."

Meanwhile, the company has been able to hire back 6 former employees just to make the fast-selling bags, they report.

And they aren't a bad deal, either. The bags retail between $30 and $35. For more information, call 574.533.8641 or e-mail

At least the people haven't given up.

Burdge Law Office
Helping consumers protect themselves since 1978.

Navistar to buy Monaco Coach ?

700 Monaco Coach shareholders are likely stuck holding an empty bag of shares of stock after the company terminated them and filed for bankruptcy in March. Everyone agrees the stock has become virtually worthless.

When there's a bankruptcy, shareholders often don't get anything because there is not enough money to pay the bills, let alone return anything to the shareholders, bankruptcy experts generally agree.

In its bankuptcy papers, Monaco said that as of Sept. 27 it had more assets than liabilities — $442.1 million in assets and $208.8 million in debt. However the company has not yet provided a complete, current list of assets and debts that explains how it arrived at those numbers.

For now, Illinois-based Navistar International Corp. is reported to have signed a "nonbinding letter of intent" to buy Monaco’s core RV assets for up to $50 million, if the sale is approved by the bankruptcy court. If so, it could be completed by late June, according to documents Monaco filed with the U.S. Bankruptcy Court.

There's still no word on warranty rights under the proposed sale, but you can bet that the big corporations aren't about to let those survive the bankruptcy filing in all probability because of the high risk and expense that would be carried over. Maybe, but maybe not.

Burdge Law Office
Because life's too short to put up with a lemon.