They were going to get screwed any way it went. Stockholders always get screwed in a bancruptcy.
That's not the way it works. The stock holders only get screwed when one of two things happen, there is no hope for a company or the judge decides to shift the assets to a new company because of a bond holder (see Kmart's history) holds a large amount of company debt and they do not want to liquidate the remaining assets.
There was hope for GM, it would have come out of it better for it if it was left in together BUT the problem was the workers who were owed nothing because of their investment into the company was ZERO. The judge was told that the labor agreements were to be left alone and renegotiation instead of breaking all the contracts as it normally is done.
As for the bondholders, most of them bought at a discount rate on GM so they didnt lose as much as you think they just didnt make as much as they wanted,
It doesn't matter, those bond holders were not just a number of speculators but pension holders and other institutional investors. It doesn't matter what they purchased the bonds for, discount or no discount, the fact is they held the debt, not the employees.
and as far as the taxpayer, how much would it have cost to just take away pensions n health from all those people?
The pensioners wouldn't have cost the tax payers a dime, they would have had to deal with what a lot of people have to deal with - living on social security.
I owned GM stock just as many workers there did. Pbgc could not afford the GM pensions or they would have gone broke and therefore affect everyone that the pbgc covers now.
True, they couldn't affford it and be solvent so I say that the rule should be this - unless the company has stolen the money (like Denny McClain) or anything illegal, then the PBGC should step in and help but if the company like GM knows that they can rid themselves from taking care of their obligation they agreed to or the union doesn't take care of the pension directly, then the PBGC shouldn't do a thing.
See Oiler, I know a lot of unions take care of the pension - the International Brotherhood of Operating Engineers is one that actually does everything from collection to investing to paying the retiree. They are responsible and if a company tanks and doesn't take care of their obligations, then they either stand in line as everyone else or make up the difference through their funds. I think because other unions do this, then the UAW should be the ones who guarentee the pension - not the tax payers.
Im an american to and have seen my taxes been used for many things i dont support, such is life as a taxpayer.
It doesn't matter, the case is that GM could have failed unless there were major changes and those changes have yet to happen. The people won't flock to the product just because they 'own' some of the company but want something that they want. By making this a special case, it seems that the people at the top in both organizations are getting away with the mess and we have to pay. Remember that the entire mess is for .3% of the population, not for 10% of the population.
The union only received 17% of the stock and that was to cover the VEBA which by the way was a claim just as much as a bondholder had. And the stock they received was alot less then they would have received in cash had GM not filed BK. Who knows, my VEBA may not be worth a dime in 5 yrs
Don't matter the UAW had no investment in the company as no worker had an investment in the company so they deserve ZERO. The bond holders, regardless who they are, invested in the company. The stock holders invested in the company but not the workers had an investment - they were compensated for their work.