GM Holden issued a list of Frequently Asked Questions to today’s media conference on its future.
While it definitely seeks to put the company spin on the whole saga we thought some of our readers may be interested in reading through GM Holden’s answers to its own questions.
Frequently Asked Questions – Holden
How is Holden affected by this filing?
Holden is not directly included in or impacted by the US court proceedings.
Does this mean Holden is going out of business?
No. None of GM’s operations outside of the US are included in the US court filings or court- supervised process, and these filings have no direct impact on GM’s plans and operations outside the US.
But doesn’t bankruptcy mean the end of a company?
Chapter 11 in the US is not like Australian law. It is a highly structured, court-controlled process that allows companies to continue trading while they reinvent their operations. Unlike the systems of many other countries, the US chapter 11 process is focused on the preservation and reinvention of a company’s business. It does not mean ceasing to trade.
What happens to Holden once New GM emerges from chapter 11?
Holden will be an important part of the New GM. We will maintain our focus on product programs and activities. That means technology improvements to our best-selling Commodore range, launching the all-new Holden Cruze and the introduction of our locally built fuel efficient, four-cylinder small car next year.
What happens to Holden’s operations during GM’s chapter 11 process?
Holden continues to run full operations at Elizabeth and Port Melbourne, producing cars for our 300- strong independent dealer network. We don’t anticipate this US action will have any direct impact on our local workforce, dealers or Holden suppliers.
Will there be any impact on your workforce?
We don’t anticipate this decision will have any direct impact on our workforce, dealers or Holden’s suppliers. Employee pay and benefits will continue. Any decisions related to Holden’s staff would be made by Holden, not as the result of any overseas action.
Are your dealers affected?
Holden dealers, warranty and customer support operations are unaffected by the US filing.
Will financial institutions continue to provide credit to Holden dealers to finance sales in Australia and New Zealand?
We do not foresee any interruption with regards to dealer or retail financing.
What happens to Holden customer warranties?
Holden warranties are not affected by this announcement.
Does GM’s announcement put a stop to any Holden projects?
No. We continue our development work on fuel-saving technologies and future models. Work has already commenced preparing our Elizabeth plant to build our all-new, fuel-efficient, four-cylinder small car. The project remains on track with production to commence in the third quarter of 2010. Our funding and capital for that project is locked in. We have also just launched the new Cruze and continue developing future models of Australia’s top- selling car, the Commodore.
Will Holden’s suppliers get paid as a result of this decision?
Holden supplier payments remain unchanged.
If Holden is not directly impacted by this decision, why are you issuing statements about it?
We wouldn’t normally issue statements to highlight that nothing has changed, but we appreciate that customers will naturally ask questions about this sort of action in the US.
Do Holden operations have access to its technology patents even though GM had filed for chapter 11?
Despite the filing, GM Asia Pacific – and that includes Holden – will have continued access not only to the intellectual property developed in AP, but also to the intellectual property developed elsewhere in the new global GM organisation.
What will happen to Holden’s management team? Will it remain in place?
We do not foresee any changes to Holden’s management.
What is chapter 11?
Chapter 11 refers to the provisions of chapter 11 of the US Bankruptcy Code that allow a company to pursue a court-supervised process to address its financial challenges while continuing to trade.
Unlike the laws in many other countries, the chapter 11 process is focused on the preservation and reinvention of businesses.
What is a section 363 filing?
GM is using section 363 to transfer assets to New GM and enable it to quickly emerge from chapter 11 as a leaner, stronger company. It is a commonly used and proven provision of the US Bankruptcy Code.
What does GM hope to accomplish via the 363 sale?
‘363’ is a proven process that will allow New GM to emerge a leaner business with a significantly stronger balance sheet, a world-class product lineup, a global footprint and industry leading expertise and technology. Many major US companies have successfully used the 363 process.
Why did GM file for chapter 11?
In the US GM reached important agreements with key stakeholders that will significantly reduce its debt and strengthen its capital structure, and help accelerate its reinvention. To implement these vital agreements, GM is using an expedited court supervised process under chapter 11. With the support of the US Government, the UAW, other key stakeholders and with safeguards for customers and suppliers, the section 363 process will enable GM to accelerate the sale of its strongest brands and operations to the New GM which will emerge a lean, profitable, self-sustaining company.
Does this mean GM is going out of business?
No. GM is reinventing its business, not going out of business. Its operations will continue as normal during the chapter 11 process, which should take about 60-90 days.
Does this filing impact GM’s operations/subsidiaries outside of the US?
GM’s subsidiaries outside the US are not included in the filing. There are no legal changes to the way GM conducts business in Asia Pacific, including Holden, as GM’s operating entities in AP are not US based companies.
Why did GM choose the 363 process over a pre-packaged chapter 11?
The US Government and GM believe the tools made available through the 363 process will enable GM to accelerate its rebuilding process. ‘363’ is a process that will allow New GM to emerge as a leaner company with a significantly stronger balance sheet, a world-class product lineup, a global footprint and industry leading expertise and technology.
Section 363 allows a company to sell assets quickly in an orderly fashion, and GM will be seeking the Court’s approval to complete the sale so as to ensure that New GM has a stronger balance sheet.
The assets sold do not remain part of the original company and are no longer included in the chapter 11 filing. Many major US companies have successfully restructured using the 363 process, including:
– Continental Airlines
– Delta Air Lines
– Federated Department Stores (parent of Bloomingdale’s and Macy’s)
– Toys R’ Us