The government may seek to ease General Motors into what it calls a “controlled” bankruptcy, somewhere between a prepackaged bankruptcy and court chaos, by persuading at least some creditors to agree to a plan that would cleave the company into two pieces, according to people briefed on the matter.
Instead of signing on every creditor as is typically required in prepackaged deals, administration officials are using as leverage the promise of taxpayer financing. Many regard the government as the only lender willing to step up with money ”” in bankruptcy or out.
“They’re going to have tremendous power,” said Lynn M. LoPucki, a law professor at the University of California, Los Angeles. “They can call off the money and the whole thing fails.”
You can just about guarantee at least two outcomes. First, it won’t be a real bankruptcy in which the court could void union contracts; the UAW will retain their monopoly and gain several seats on the board. Second, real bankruptcy [i]will[/i] come, but only after November, 2012.
GM’s core problem is that they produce a lot of poor vehicles. I have a 1990 Toyota pick-up with almost half a million miles on it, and I’ve used it [i]hard[/i], often carrying nearly a ton in the back. It still rides better than most of the new stuff coming from the Detroit 3.
The problem isn’t the American worker. My 2002 Toyota pick-up was built in California and it’s also way better than the stuff coming from ‘Detroit.’
OTOH, I just got rid of my 2007 Camry. I absolutely loathed that car, and won’t even consider another Toyota.
As for bankrupting GM, why did we have to spend $25 billion to figure this out?
Jeffersonian, I felt the same way about my 2000 Corolla, especially after the engine sludged up (which I understand was common until they redesigned it in 2002, but Toyota refused to accept responsibility).
My Dodge Caravan is much the superior car in almost every way.
OTOH, I’ve driven Toyotas since 1980, all of them well over 200K and never had a problem with them. Love Corollas, Camry’s and Avalon (especially Avalon). Far and away superior to every GM car I ever owned in 70s (2 of them), and Oldsmobile Cutlass that I owned from 84-86 ( horrible quality) and a Chrysler Colt MiniVan, 86-87, whose transmission died at 30,000. The Previa we had from 87-94 was maybe the best vehicle I’ve ever been in.
Oh, it wasn’t a lemon at all and I’m certain it would have lasted as long as yours, Billy. But the transmission was horrible, hunting, missing gears and what not, plus the car squeaked like I was driving a styrofoam cooler around. I was far, far happier with my old Chrysler Concorde.