GM Bondholders Propose to trade Debt for Control of the Company

This sounds like a pretty good deal for the taxpayers and would save us having to loan the company even more money if it goes Chapter 11.

The ad hoc committee of GM bondholders said their plan would see them get 58% of the new company in return for debt forgiveness while saving U.S. taxpayers $10 billion in cash. The union health-care fund, based on the $20 billion in benefits owed, would own 41%.

So we have the union health-care fund as a stake holder and the bond holders in control of the company. That means the government does not have to nationalize yet another company and be forced to cover their warranties and other undesirable things. My money is on the Obama team rejecting this offer and low-balling the bondholders. If that is the case the bondholders should force the issue by declaring that they will force the company into Chapter 7 and receiving their money through liquidation.