A quick read of the General Motors Chapter 11 Bankruptcy petition gives some fun facts about the collosal disaster that is GM.
Total Assets: $82.3 Billion
Total Debts: $172.8 Billion. That’s 217% of assets, $90.52 billion in net debt and bigger than the GDP of New Zealand.
- How did it get this far?
The biggest trade debt ($121.5m) is to advertising agency Starcom. (They are the 6th biggest unsecured creditor, after big bond holders and employees). Meanwhile Publicis Groupe went for $25.3m, Interpublic for $16m and McCann Erickson for $4.6m. That’s $167.4m in total advertising agency debt.
- If your biggest supplier is an advertising agency, wouldn’t you begin to suspect that there is a disconnect between your advertised messages and your products?
- How did you measure the impact of your advertising spend?
Meanwhile metal suppliers US Steel, Arcelor Mittal and AK Steel Holding Group all managed to keep their debt under $10m.
- How come they were so smart and Starcom et. al so dumb to be left holding the bag? Starcom in particular is looking pretty stupid.
GM owed Enterprise Rent a Car $33m, Avis $12m, Hertz $8.7m – for a total of $53.7m.
- Was GM really paying rental car companies to take their cars?
- Why did rental car companies give their customers crappy GM cars that have higher maintenance costs and lower lives (versus say Toyota’s)? Was that doing the right thing or taking the money and damn the customer?
Bottom of the list of top 50 unsecured creditors are consultants Cap Gemini – with $4.4m in trade debt.
- How much did they save GM for that $4.4m consideration?
- If they are such good consultants, then how come they didn’t get their money up front?
- What other consultants were used in the last, say, 10 years? How much did that cost, and what did they make/save for GM?
I’m glad GM is in Chapter 11 (refinance and trade out) – it’s the right thing to do, though I do feel that a full blown Chapter 7 (close it down and divide the pieces) is the better option. GM has become to bloated, is crippled with legacy staff and pension issues and makes vehicles which are amusingly ugly, woefully inefficient and mired in the past.