GMAC to GM: Brother, Can You Spare $1.5 Billion?

Which one is worse off, GM or its former captive finance company, GMAC Financial Services?

A one-paragraph filing with the Securities and Exchange Commission hints that as badly off as GM is, GMAC may be harder up for cash right now. The two companies filed identical documents on Dec. 15.

Both companies are racing to avoid a potential bankruptcy filing. GM is looking for a direct government bailout in the form of loans. GMAC is looking for a bailout too, by the more indirect route of becoming a bank holding company first, which would then be eligible for funds from the U.S. Treasury Department's Troubled Asset Relief Program. Both companies are strapped for cash.

But according to the Dec. 15 filing, GM is giving GMAC more time to pay for cars that GMAC finances for dealers. In terms of a household checking account, it's as if GMAC wrote a check to GM, and GM agreed to hold it for a month before cashing it.

GMAC must really need the money, because GM has warned Congress repeatedly that it could run out of cash if it doesn't get loans before Dec. 31. Yet, GM is passing up cash it could be collecting from GMAC. Privately held Cerberus owns 51 percent of GMAC. GM owns the rest.

The way it works is, GMAC normally pays GM for cars as soon as they leave the factory. Most GM dealers in effect buy on credit the cars they put in their inventories -- but from GMAC, not directly from GM. The dealers repay GMAC when those units are retailed.

Under the new arrangement GM and GMAC disclosed this week, GM will allow GMAC to pay GM for the cars when they're retailed, instead of when they leave the factory. This appears to be a one-time arrangement, for December.

The net effect is that GMAC gets to hang onto $1.5 billion in cash until Dec. 30, instead of having to pay in early December, according to the SEC filing. That may not sound like much for such big companies, but nowadays it all adds up.