GM faces $250M past due notice

The US taxpayer is dead last.
GM faces $250M past due notice http://tinyurl.com/muh9qz
The bankrupt automaker can pay most parts suppliers. But HP, AT&T and ad
agencies not on 'critical vendor' list shouldn't expect GM checks in the mail. By Chris Isidore, CNNMoney.com senior writer June 19, 2009: 3:30 PM ET
NEW YORK (CNNMoney.com) -- General Motors owes hundreds of millions of dollars to major suppliers who have never made an auto part, rubber tire or sheet of steel -- and they're not likely to get paid anytime soon.
GM is on the hook for more than $100 million for advertising it purchased before filing for bankruptcy earlier this month. The list of utilities who are GM creditors takes up 80 pages in its bankruptcy filing.
Among the company's top 50 creditors, 10 are outside the auto or transportation industries. GM owes these firms just under $250 million. But they have to take a back seat in the bankruptcy process.
While virtually all of the auto parts makers who work with GM are being declared "critical vendors," which allows them to receive their next payments by July 2, GM's other suppliers are not guaranteed payments anytime soon. The company cannot make payments to them without approval from the bankruptcy court.
"This is affecting many many different industries, far more than people realize," said Heidi Sorvino, head of the bankruptcy practice in the New York office of law firm Smith, Gambrell & Russell, who is representing some of GM's suppliers.
The lucky vendors, those that will have a continued business relationship with GM after it emerges from bankruptcy, are likely to eventually get paid for their services once they renew their contracts. But they may have to wait months before doing so.
Media buying firm Starcom Mediavest Group is GM's largest vendor creditor. It is owed $121 million for ad time and space it purchased on GM's behalf. That's about $11 million more than what GM owes Delphi, its largest auto parts supplier.
GM owes three ad agencies a total of $46 million. Technology giant Hewlett Packard (HPQ, Fortune 500) is owed $17 million, just a bit less than the money it owes railroads CSX (CSX, Fortune 500) and Union Pacific (UNP, Fortune 500) combined.
GM also owes AT&T (T, Fortune 500) more than it owes U.S. Steel (X, Fortune 500) or any other steelmaker.
Several of these big vendor creditors outside the auto industry had no comment about when they expected to be paid by GM.
Of course, none of these major companies are likely to face a cash crunch if GM doesn't pay them in a timely fashion. But for many other vendors, delayed payments could be a matter of corporate life and death.
"If you're a small supplier, and you live hand to mouth, you need that check," said Sorvino. "You have your own operating expenses, payroll and leases."
GM does not break down in its bankruptcy filing how much it owes to critical versus non-critical vendors. But the company owed $18 billion to vendors worldwide as of March 31. That means a lot of suppliers probably won't get paid next month.
Sorvino said she expects widespread bankruptcies of smaller GM vendors. That could lead to many workers losing their jobs who didn't even realize they were depending on GM for their livelihood.
Worse off are suppliers who do not have a continuing contract relationship with GM, but are currently owed money. Even if these firms do work with GM again in the future, their previous bills make them unsecured creditors. So they will be lucky to get pennies on the dollar on what's owed to them -- and probably not for at least another year.
GM spokesman Dan Flores said the company has done what it can to help vendors, particularly auto parts suppliers who depend on GM to stay in business.
"Unfortunately through this process there are suppliers that do not fall into that [critical vendor] category," he said. "However, we are continuing to work with them as much as we can."
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Civis Romanus Sum

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The taxpayer and consumer are still on the hook for all of this. AT&T is going to get that revenue one way or another from someplace, as must all the other suppliers. Or they can go down in the chain reaction. What a mess this is going to be.
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And yet with GM operating in what is in essence, criminally bankrupt for too long not one arrest.
I can't really say I feel sorry for any GM or related bankruptcy. If you are running a business in a half baked competant maner the minute a customer ceases paying the bills you stop shipping the goods until the bill is paid in full. But far too many idiot managers let GM drive them to bankruptcy.
Now they are milking taxpayers which will turn out to be the biggest corruption scandle of all time. Might even hot $1 trillion when the suppliers and pensions and all the other hidden debt is counted. Big price to pay for Obama Government Motors.
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ANYONE dealing with GM is best advised, cash only. Of it cheque, when it clears certification we ship. That is, cash on the barrel.
GM is now synonomous with debt-welching. Do you know a GMer? Now has a new meaning.
GM has a sub-zero credit rating. It is why they should have just liquidated GM right off and saved the taxpayers $65+ billion (and growing) costs. Any company or individual who trusts GM to pay a bill is crazy.
I have no sympathies for businesses who deal with GM on credit at this point. GM personifies the money for nothing and corruption that is part of this depression/recession. If you lend to GM or take 60 days credit, you deserve to get screwed.
It is why GM is destined to fail. They have pissed off every vendor they have. Causing vendors to go bankrupt, lay off staff and often without the bailouts. Their supply chain is a hopeless mess.
And they will do it again.... and again... as each week the taxpayers get screwed for the criminal operation called GM....
As a consumer, buyer beware. The GM turkey is going to fail.
Now I understand some jack ass in Washing DC wants it different, but the fact remains you need to fully and completely honor your debts to stay in business. Otherwise you are a GMer. And GMers screw people.

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