Yeah that GM bailout sure is turning out badly

[clambake]

come on cowboy, the timing of the domino effect would have been unimaginable.

[CosmicCowboy]

be that as it may, name calling and running away from points you didn't even bother to rebut makes you look like the ignorant ass.

I can live with that.

If you find pleasure in attempting to explain things to ignorant asses that don't really want to listen or learn please feel free to answer his dumb question...

What collateral do bondholders put up?

[CosmicCowboy]

In order of their priority...

In a bankruptcy, assets and proceeds are distributed to satisfy claims in order of the claims' priority. Investors who take the least amount of risk are paid first. As a result, creditors and bondholders who lend a company money will be paid before its stockholders, who have purchased an ownership stake. Creditors are paid after legal and administrative costs have been covered.

Secured creditors, whose claims are protected by specific assets or collateral, such as real estate, are paid first.

Then unsecured creditors, which often include bank lenders, bondholders and suppliers, are next in line.

Stockholders, who have purchased a portion of the company, are paid last, if there is money available after the secured and unsecured creditors' claims have been paid.

http://www.investinginbonds.com/lear...10&subcatid=67

[Winehole23]

nm

[vy65]

You do know that in order to have a secured claim in bankruptcy, some form of collateral is needed to secure the debt.

Bondholders purchase securities. These are unsecured creditors of the corporation. Why do you think people freak out about European sovereign debt so much?

You've made no claim nor provided any evidence that secured bondholders (i.e. a mortgage bondholder) got ed in the bankruptcy?

Why do you cry like a little girl instead of answering questions?

[vy65]

Stockholder =|= Creditor.

If I own a company, that doesn't mean I own that company's debt.

And I'm the ignorant ass?

[vy65]

I also liked the part where you ignored that block quote stating bondholders are unsecured creditors

[CosmicCowboy]

*sigh*

They are freaking about the sovereign debt because there is not even enough money to pay the senior tier bondholders in full, thus they HAVE to agree to a haircut.

[CosmicCowboy]

Stockholder =|= Creditor.

If I own a company, that doesn't mean I own that company's debt.

And I'm the ignorant ass?

WTF???????

Bonds are not Stocks dumbass.

[vy65]

So you can't answer the question then? Got it.

[vy65]

WTF???????

Bonds are not Stocks dumbass.

Yes, that's why there's a not-equal sign between stockholder and creditor

[Wild Cobra]

Stockholder =|= Creditor.

If I own a company, that doesn't mean I own that company's debt.

And I'm the ignorant ass?

It depends on the class of stock that you own.

[LnGrrrR]

Joe, Fred, and Pete sell apples at the farmers market. Together they sell 100 apples a day.

Pete starts smoking crack and gambling and loses his fruit stand in a craps game to Jose.

Now Joe, Fred, and Jose sell apples at the farmers market. Together they sell 100 apples a day.

Where is the economic loss?

A bit necro, but going through this thread I just wanted to highlight this post. I'd like to point out there's probably some loss of wealth here, as Jose may not know all the ins and outs of what apple trees to plant, the best times to pick, the best places to sell them, etc etc.

[CosmicCowboy]

A bit necro, but going through this thread I just wanted to highlight this post. I'd like to point out there's probably some loss of wealth here, as Jose may not know all the ins and outs of what apple trees to plant, the best times to pick, the best places to sell them, etc etc.

Apparently GM had the same problem as Jose...

[RandomGuy]

I guess you missed the part where I said I used my friend google, and wasn't able to find anything about bondholders being crushed. Which leads me to my next point: you're full of .

It's cool if you don't want to take 20 minutes out of your busy schedule typing a response - or the 15 seconds it'd take to post a link or something. I'm content with thinking you're full of on this one if you are.

The bondholders weren't crushed. The common stockholders were.

Generally in a bankruptcy the common stock holders are lucky to get a penny or two on the dollar.

The bondholders, being creditors of the company, then generally assume equity interests, in the form of new common shares proportional to their claims (i.e. bond value relative to overall liabilities)

Preferred stockholders are somewhere in between in terms of who gets paid and in what order. (preferred stock can have a lot of variance in terms and is considered something of a hybrid between equity/debt for that reason)

Hope this helps.

I don't know for certain the details of the arrangements, but that is how it happens normally.

It was pointed out that the UAW, as creditors were given equity stakes, i.e. stock shares.

[RandomGuy]

A bit necro, but going through this thread I just wanted to highlight this post. I'd like to point out there's probably some loss of wealth here, as Jose may not know all the ins and outs of what apple trees to plant, the best times to pick, the best places to sell them, etc etc.

The economic loss is the loss of Pete's income.

What CC misses from an economic perspective:

In his example, the "economy" consists of four people, not the three he simplifies to.

Joe, Fred, and Pete, and Jose existed prior to Pete's problem.

Presumedly Jose already had a job, that he would have had to have quit to sell the apples.

In this case, the four person economy then lost the "income" of Pete.

There is more to it, but that is it in in a nuts .

scott could probably speak at grearter length on the economic impact.

As it is, the best summary is that it isn't a very good example. Sorry, CC.

[CosmicCowboy]

The bondholders weren't crushed. The common stockholders were.

Generally in a bankruptcy the common stock holders are lucky to get a penny or two on the dollar.

The bondholders, being creditors of the company, then generally assume equity interests, in the form of new common shares proportional to their claims (i.e. bond value relative to overall liabilities)

Preferred stockholders are somewhere in between in terms of who gets paid and in what order. (preferred stock can have a lot of variance in terms and is considered something of a hybrid between equity/debt for that reason)

Hope this helps.

I don't know for certain the details of the arrangements, but that is how it happens normally.

It was pointed out that the UAW, as creditors were given equity stakes, i.e. stock shares.

In this case the UAW (unsecured creditors) were jumped ahead of the bondholders (secured creditors)...mainly for political purposes...it was pretty unprecedented...Yeah, the bondholders got a sliver of the new deal but NOTHING like they would have gotten in a normal bankruptcy.

[vy65]

In this case the UAW (unsecured creditors) were jumped ahead of the bondholders (secured creditors)...mainly for political purposes...it was pretty unprecedented...Yeah, the bondholders got a sliver of the new deal but NOTHING like they would have gotten in a normal bankruptcy.

But for all the indignant assertions about legal rights, it’s far from clear what exactly is meant to be illegal here. After all, the GM bondholders (unlike the banks holding Chrysler loans) are not secured creditors, so there’s no issue about them being senior to other stakeholders like the UAW

http://blogs.reuters.com/felix-salmo...l-rights-meme/

[vy65]

I dunno how else to say it.

[CosmicCowboy]

I dunno how else to say it.

I noticed that. You are not only ignorant you are too painfully stupid to even realize it.

[vy65]

According to the annoyingly-anonymous website, the government has used its control over the bondholders “to promote its political agenda over the rule of law” and “has proposed a restructuring scheme that disregards and would overwrite contractual rights of lenders and the statutory protections afforded them through the bankruptcy code’s priority rules”. But I still haven’t found anybody actually spell out what those contractual rights are supposed to be, whether they’re “enshrined in the bonds’ trust deeds” or otherwise.

The GM bondholders do have a PR representative, Tom Vogel. When I asked him about this, he replied by giving me some “comments on background”, which means that he was asking me, weirdly, not to repeat what he said. So I’d just ask this: the next time that somebody claims that the treatment of GM bondholders in any way violates their legal rights, can they be specific about exactly what legal rights are being violated?

As far as I can make out, the main legitimate complaint of the GM bondholders is that they’re getting paid out less than other unsecured creditors (specifically the UAW) with whom they’re pari passu. But I don’t think there’s a legal right anywhere for all pari passu creditors to receive exactly the same treatment. If you owe money on four different credit cards, there’s no law saying you have to pay them all the same proportion of the total amount outstanding.

Same link.

[vy65]

I noticed that. You are not only ignorant you are too painfully stupid to even realize it.

Do you have anything substantive to add? Or are you just gonna use the same, tired insult to try and hurt my feelings?

[CosmicCowboy]

Do you have anything substantive to add? Or are you just gonna use the same, tired insult to try and hurt my feelings?

The guy in the op-ed ADMITTED he hadn't read the trust do ents for the bonds and couldn't do ent his claim that the bondholders were unsecured. Guess you missed that part, hmmmmm?

[vy65]

The guy in the op-ed ADMITTED he hadn't read the trust do ents for the bonds and couldn't do ent his claim that the bondholders were unsecured.

Have you read the trust do ents for the bonds?

[CosmicCowboy]

Have you read the trust do ents for the bonds?

For every "op-ed" piece you can find claiming the bonds might be unsecured there were 10 news articles saying they were in fact secured creditors.

I'm not going to beat this dead horse again.