Congrats Government! You May Have Gotten GM Right This Time

GM filed for bankruptcy a while back after it was determined the former #1 automaker could not run from its problems. After giving GM bailout money a couple times, the government finally did what it had to do. Now GM is in the midst of a bankruptcy plan in hopes of contending for the top spot in car sales in the future.

GM will retain its most profitable assets: Chevrolet, Cadillac, Buick, and GMC. These assets will be moved to a new company owned by the US Treasury. The US government will own 61% of the new company, the Canadian government 12%, the union will receive a 17.5% stake, and creditors will get a 10% stake. Should this plan work, GM will exit bankruptcy in the next 2 months. The company could even go public within the next 2 years.

The old GM will keep any bad assets that other companies will not buy. It will be liquidated over time. This is a great move by the government. Had GM been given even more bailout money and readjusted timelines every quarter, this would have drawn the process out a lot longer than it should have been. Liquidating the whole company would also have been terrible for the economy. Spinning off a new company with given timelines is a move that just could work. GM is still a terrible investing spot for individual investors. However, a spinoff in a couple years could be appealing. Be prepared for this terrible process to right itself and give you the chance to make cash money.