Suppose bondholders and the UAW agreed to the government concessions

QUESTION

1. Suppose bondholders and the UAW agreed to the government concessions. What would be the likely financial outcome for each party over the next few years (for bondholders, retirees, current employees, GM, and the federal government)? Explain.2. If you were the UAW, would you consider concessions asked of the bondholders to be fair relative to concessions asked of you? If you were a bondholder, would you consider concessions asked of the UAW to be fair relative to the concessions asked of you? Explain in detail.3. If you were a bondholder, would you accept the government’s required concessions, or would you reject them and possibly force General Motors into bankruptcy? Explain. As part of your explanation, describe the likely outcomes of a bankruptcy filing, including which parts of General Motors should be closed and which should be restructured, and which contracts should be cancelled and which accepted. The following Web sites may be of help in answering this question. The first is a link to the bankruptcy code; the others are links to major restructuring firms.

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