The White House said on Thursday that an “orderly” bankruptcy was one option being considered to try to rescue General Motors and Chrysler, which are seeking billions of dollars to avoid a shutdown.
President Bush’s spokeswoman, Dana Perino, confirmed growing speculation within legal circles that the president and Treasury Secretary Henry M. Paulson Jr. were considering the step as part of an overall rescue package for the automobile industry.
The action would be unusual, and would require concessions by the United Automobile Workers union, suppliers, investment banks, the federal pension board, bondholders and other stakeholders in the two auto companies.
Ford Motor, which does not face an urgent need for capital, is not likely to be part of any rescue package.
Chapter 11 is probably the best way to reorganize GM in a legal way. Just bailing them out would set dangerous precedents. Let a bankrupty judge handle it. You can come out of Chapter 11 stronger than when you went in. I use Kmart for an example because I know the facts. They went in to Chpter 11, reorganized, came out of Chapter 11 and very soon after had the resources to buyout/merge/become Sears Holdings. Not bad for a dead company walking.
We must do what ever is necessary to allow us to compete in the auto industry. This includes working over the industry and the union. I will ask a pointed question. We have 3.5 million auto workers (???) but I keep hearing that we have only ~700,000 UAW workers. Am I missing something?