The Ugly Choice Creditors Face with GM
Posted by admin . Published on 31 May 2009, Received
When investors lend money to a company, they expect to get it back. However, those who lent the money to GM, are not going to get it back. Those who lent $27bn to General Motors when they bought its corporate bonds have the risk of losing the lot. Now, the only choice they have is to accept a shareholding in a new company with a very uncertain future. It is an ugly choice. They earlier turned down a 10% shareholding in GM thinking it is too small for that money. But the deal was a vital part of GM’s plan to reduce its debts and avoid bankruptcy. Without an agreement, bankruptcy became inevitable.
