[A-List] SIMPLY STAGGERING: GM took an $8.6 billion loss for 2005

["Charles Brown" <cbrown@xxxxxxxxxxxxxxxxx>]

More staggering is GM dividend payout of $2 which comes to 8.45% yield on
day of market share price. The payout amounts to $1.1 billion. With a cash
reserve of $19.2 billion and a bank credit line of $5.6 billion, and
effectively shut out of the commercial paper market,  and estimates of $1.5
billion negative cashflow in case of a strike, GM will be insolvent  in
about 13 weeks. -Clip-

Henry C.K. Liu

^^^^^

Hmmmm,insolvency. I have to bone up on my technical finance terms. Imagine
the bankruptcy court selling off GM to creditors.

Then Ford ain't in such great shape either.

Detroit's twin economic towers are caving in too ?

CB

^^^^


Insolvency


>From Wikipedia, the free encyclopedia.

The term Insolvency describes a financial condition experienced by a person
or business entity when their assets   no longer exceed their liabilities
(commonly referred to as balance-sheet insolvency) or when the person or
entity can no longer meet its debt   obligations when they come due
(commonly referred to as cash-flow insolvency). It is often used
interchangeably, and incorrectly, with the term bankrupt.

A state of insolvency generally leads to a legal finding of bankruptcy.
However, because putting a person or entity into bankruptcy requires the
payment of court fees, an insolvent person or entity may be insolvent and
not legally bankrupt.

In most jurisdictions, it is an offence  under the bankruptcy laws for a
corporation <http://en.wikipedia.org/wiki/Corporation>  to continue in
business once it is insolvent. (A notable exception is the UK, where it
isn't, in and of itself, even considered improper.) It is also usually
grounds for a civil action, or even an offence, to continue to pay some
creditors <http://en.wikipedia.org/wiki/Creditors>  in preference to other
creditors once a state of insolvency is reached. When determining whether a
gift or a payment to a creditor is an unlawful preference, the date of the
insolvency, rather than the date of the bankruptcy, will usually be the
primary consideration (however in the UK, both are relevant).

For example, if a corporation pays a large bonus to its management   several
months before it actually files for bankruptcy protection, the court will
not look at the date of the bankruptcy filing, but at the date where the
corporation's debts exceeded its liabilities, and/or the date at which it
was unable to pay its debt obligations when they became due, in determining
whether the directors can be sued for the return of the bonuses.

In the United States > , under the Uniform Commercial Code
<http://en.wikipedia.org/wiki/Uniform_Commercial_Code> , a person is
considered "insolvent" when the party has ceased to pay its debts in the
ordinary course of business, or cannot pay its debts as they become due, or
is insolvent within the meaning of the Bankruptcy Code
<http://en.wikipedia.org/wiki/Bankruptcy_Code> . This is important because
certain rights under the code may be invoked as against an insolvent party
which are otherwise unavailable.

Although the terms bankrupt and insolvent are often used in reference to
governments or government  obligations, a government cannot be insolvent in
the normal sense of the word. Generally, a government's debt is not secured
by the assets of the government, but by its ability to levy taxes
<http://en.wikipedia.org/wiki/Taxes> . By the standard definition, all
governments would be in a state of insolvency unless they had assets equal
to the debt they owed. If, for any reason, a government cannot meet its
interest obligation, it is technically not insolvent but is "in default". As
governments are sovereign entities, persons who hold debt of the government
cannot seize the assets of the government to re-pay the debt. However, in
most cases, debt in default is refinanced by further borrowing or monetized
by issuing more currency <http://en.wikipedia.org/wiki/Currency> .



This article is in need of attention
<http://en.wikipedia.org/wiki/Category:Pages_needing_attention> .

You can help Wikipedia by editing
<http://en.wikipedia.org/w/index.php?title=Insolvency&action=edit>  it into
a better article
<http://en.wikipedia.org/wiki/Wikipedia:How_to_write_a_great_article> .
Please also consider changing this notice to be more specific
<http://en.wikipedia.org/wiki/Wikipedia:Cleanup_resources>