THE new leaner and more competitive GM emerged out of bankruptcy court on July 10, 2009, forty days after it filed for bankruptcy protection. The good assets were sold to a new GM owned by the government and workers. The bad assets remain under the protection of the bankruptcy court, which is sorting out creditor claims against the assets. The good assets include the Cadillac and Chevrolet brands, which are profitable. The new GM comes out of bankruptcy court with only one fourth of the original debt carried by GM. It was able to get rid of 75 percent of accumulated debt in forty days in bankruptcy court with the profitable assets in tow. Last month, GM sold the Saturn line to Penske Automotive Group, and the Hummer line to a Chinese heavy machinery maker in Sichuan, China.
On the other hand, Chrysler was in and out of bankruptcy court in 45 days. The good assets of Chrysler were sold to Italy’s FIAT and the new Chrysler also shed off a lot of debt, and is now leaner and more competitive.
With both GM and Chrysler out of bankruptcy and promising more interesting and fuel- efficient hybrids, they may just give Toyota and Honda a run for their money. That’s more easily said than done. Toyota’s Camry has been and continues to be a very popular model and the Prius is still number one in hybrid technology. The 2009 version of the Prius claims an average 51 MPG, a bigger 1.4 L engine, and a larger inside space than the previous version as well as a solar panel to help the air-conditioner. In small cars, Honda’s civic, both the hybrid and regular is popular with the younger generation, and has resurrected the Insight hybrid to compete with the Prius with a distinctive price discount.
Without bankruptcy court protection and reorganization, both GM and Chrysler would be dead today despite billions of government bail out funds. Bankruptcy law allowed both GM and Chrysler to get rid of debt and to get out of or modify onerous contracts including contracts with worker unions and thousands of car dealers across the country. It allowed them to sell their profitable assets to a new GM and Chrysler, to get the good assets out of the reach of creditors. At the same time, they were allowed to keep the bad assets in bankruptcy court where they are protected from lawsuits. Thus, bankruptcy was good for both GM and Chrysler.
Bankruptcy may also be good for individual debtors who have too much accumulated debt. An individual debtor may owe too much debt on real estate or may owe too much credit card debt to such an extent that he is operating his life on a negative cash flow. This causes a lot of stress on the individual because he is hounded by thought of owing too much money every day. The only time he forgets about this problem is when he is asleep. Michael Jackson is an extreme example of someone dying from too much debt. Michael could not sleep because he owed half a billion of debt. He used all kinds of sleeping pills to sleep. But the minute he woke up, the half a billion of debt was staring him in the face again, day in and day out. His debts would not go away even in ‘Neverland,’ which was set for a foreclosure sale last year because of a $23 million mortgage, which Michael could not pay.
If you have too much debt, don’t resort to sleeping pills to forget your debt. You will end up like Michael. Follow the lead of GM and Chrysler. Bankruptcy will solve your debt problems with a simple solution: it will get rid of all your debt while allowing you to keep most if not all of your assets. You will keep your house, your cars, your furniture, your retirement accounts, and most importantly, you will be able to save your life and become a productive citizen again, just like GM and Chrysler. You will become a leaner and profitable person again.
Contact my office. I will analyze your case personally.
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Lawrence Bautista Yang specializes in bankruptcy, business, real estate and civil litigation and has successfully represented more than five thousand clients in California. Please call Angie, Barbara or Jess at (626) 284-1142 for an appointment at 1000 S. Fremont Ave., Bldg. A-1 Suite 1125 Unit 58, Alhambra, CA 91803.
( Published on July 18, 2009 in Asian Journal Los Angeles p. C4 )
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