General Motors Board: Bankruptcy An Option

The board of directors of embattled U.S. automaker General Motors Corp is considering "all options" including bankruptcy, according to a report on the Wall Street Journal's website late on Friday.

The paper, citing people familiar with the board's thinking, said the stance puts it in conflict with chief executive Rick Wagoner, who told lawmakers this week bankruptcy is not a viable alternative for the company.

Read the whole story here.

Comments

[strangerinthenight]

It's appropriate that the Big3 and the pay-perks-pension Unions crawl to Washington. Good to see them on their knees. Then slam the door in their faces. They deserve it.

[schatsie]

Look these thugs, the board of directors will not suffer, they have their 7 houses a piece, their million dollar a year pensions and businesses... YES Even the directors are getting money (maybe from their own companies, but they are still fat greedy bastards).... The plan is take GM down, convert the pensions for salaried office workers to the new company or whatever (like they raided the pensions in the 1980s) and cut off the union...AND THEY THEMSELVES WILL STILL BE RICH AS MIDAS and will pick up the pieces of the companies and turn it into another WALMART (no unions, workers locked in for the night, no overtime, no healthcare, no pensions)....

Get real!

[strangerinthenight]

Still stuborn and locked in your fantasy - GET INTO THE PROGRAM AND GET REAL. Unions are no longer relevant. Walmart employees overwhelmingly rejected Unionization.








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[BigHeadTodd]

Who could have foreseen that producing vehicles that are designed to break down after the warranty is up and get about 17 mpg is a bad business model?

Wake up and smell the coffee, America.

The auto industry needs a COMPLETE OVERHAUL not a way to piss away our money via a bailout!

[blastocyst]

The majority of the vehicles age-20 and older still soldiering on out on the highways are Detroit-rolling iron. I have a 23 year-old Pontiac Fiero GT with a V6 and an auto-trans that still gets 26 mpg going point-to-point when I take her out every week. It was a daily driver until 4 years ago. Original motor. Oil changed every 5000 miles. Regular service. Also have a 6-speed 1994 Camaro Z28. 93,000 miles. Regularly serviced and garaged. Zero problems with her. 2006 GMC Yukon Denali. That has moved me and my fiance while towing the Camaro filled with items the movers didn't take while getting 16mpg between Atlanta, GA and the town of Northeast, MD. Try that in a Prius. They last if cared for.

[strangerinthenight]

It's possible that out of 10 million GM, 10 were assembled right. The rest are junks.

[DubiousAtBest]

There are 300 million people in this country....how many of those are adults?
Why not give every adult American 1 million dollars and call the recession OVER. Lot cheaper than the billions thrown at Wall Street never to be seen again.

Certainly would solve MY problems.

[KillTheMessenger]

"There are 300 million people in this country....how many of those are adults?"

At most 300 million - 1, judging by the quality of your post because 300 million times $1 million happens to be $300 trillion, about five times the total value of the US. For that much money you could roughly buy the whole world. How's that cheaper than the bailout?

[DubiousAtBest]

How many of those 300 million are children? Combine the TRILLIONS being spent in Iraq and the BILLIONS and BILLIONS (rapidly increasing) being thrown at bailouts right now...

uh, I think my idea (which was a JOKE anyway, Einstein...) would still be cheaper!

[grata2ude]

The American economy went to hell when companies started to treat employees as liabilities and not assets and when they decided the CEO's were to be billionaires and the workers had to concede everything in order for that to happen.

[grata2ude]

Bankruptcy not an option, how bout firing these overpaid egotistical selfish CEO's and selling their private jets, It would be a starting point.

[wedgie]

Is s.h.i.t canning the board an option?

**

[musselmanm]

GM CEO making $5,300 per hour.

[suziq]

Why doesn't Big Oil bail out the Big Three? Problem solved....

[TheJibreelaMonsters]

why dont congress just bail me out... they are millionaires and they can spare a buck

[Egalitare]

Because that would be investing in a venture that, if run correctly, would eventually squeeze their profit margins to just "pretty good" -- as opposed to "outrageously decadent."

[socalgal59]

Bankruptcy for a company as large and complex as GM poses major challenges--the most difficult will be to get all of the major stakeholders, creditors, and other 3rd parties to agree on a new business plan; followed by approval of that new plan by a bankruptcy judge; followed by the company securing debtor-in-possession financing (required to emerge from bankruptcy).

One need only look at the long, drawn out Delphi bankruptcy to see just how complicated--and unsuccessful--the process can be. Delphi filed Chapter 11 in October 2005. Like the auto-makers, Delphi was hit hard by the downturn in domestic auto sales, suffered from management problems, and legacy cost issues. Delphi is entering its 4th year in Chapter 11 with no end in sight. In April of this year, Delphi's debtor-in-possession financing--and subsequent emergence of bankruptcy--fell through when investors from Appaloosa Management back out. It"s anyone's guess if or when Delphi will emerge from bankruptcy.

Bankruptcy is more complicated since 2005 legislation allows creditors and other 3rd parties the right to present a reorganization plan of their own--which includes liquidation. GM is much larger and more complicated than Delphi. Further, the new laws favoring creditors and 3rd parties make it more difficult for a company to emerge from bankruptcy. Bankruptcy should be a last resort for large companies.

[EndangeredJackalope]

Not to mention that there is no credit market to fund a Chapter 11 process - hello total liquidation.

This is Nobel-winning economist (and market collapse predictor) Paul Krugman's grudging conclusion. Normally he would support Chapter 11, but it is a physical impossibility. Total liquidation under Chapter 7 would destroy the entire industry, and the economy.

[KillTheMessenger]

If he really said these things without any differentiation, Mr. Krugman is an amateur who needs to go back to school and repeat economics 101.

[strangerinthenight]

GM stocks are trading at $2-3/share, the company is worth about 3 billion. Very cheap for once a world Icon. In the last 4 years, cash flow bled, and they continue to lose 1 billion per month. It's sink or swim for every creditor and their suppliers. I don't foresee GM destroying the US economy. Talk about fear mongering.

For Krugman, I guess they have to take back his Nobel Prize if he actually said that GM under total liquidation would destroy our economy. Not that you don't already know, but our yearly economic output is about 16 trillion a year. Yup, Krugman should return his Nobel prize, if he actually made those statements.

[Gaia Terra7]

All corporations should be employee owned.

[openhand]

Agreed

[KillTheMessenger]

Russia tried that a whole ago. I believe they called that communism. They are still suffering the consequences.

[Gaia Terra7]

No, KTM, it is called employee owned co-ops and they work quite well.

[Gaia Terra7]

Communism = State Owned!

[Robocalledbynitwits]

It's the only option. GM, Ford and Chrysler have to get rid of those competition-killing union contracts if they ever want to return to profitability. No profitability, no jobs. The unions don't get it. In bankruptcy these contracts can be rewritten so that American cars, which are as good as foreign cars, won't cost $2,000 more per car to manufacture. Until that is accomplished anything you do is putting a bandaid on a gaping wound.

[openhand]

you just outed yourself, this is why they will et it drag on, to kill the unions. another example of the money guys making the workers pay for their greed.

[EndangeredJackalope]

The $70hr story is a phony old cliche. Most workers make around $30 and have good health care b/c that world destroys your body (which is about $40hr in the end.)

The UAW has made huge concessions and worked really well with the companies in the past few years, but this garbage is what you hear out of every anti-union idiot who spouts a grand judgment without actually analyzing what the state of the company is.

[blastocyst]

A GM bankruptcy would accelerate our slide into the abyss, hasten the slide of America toward second-tier insignificance. (that 2025 due-date) It would undermine the ability of those workers affected to be dutiful consumers while adding 2 or 3 million jobs to the pyre and place that same number of souls in competition for those few jobs that there are. Momentum. Deflationary.

[TheJibreelaMonsters]

you would of said this back in the 1970's when the steel industry when under

[blastocyst]

I was 14 then. Dad was in Steel. Mom cared for the 5 of us. Dad heard the doors slamming behind him even as he worked in his diligence to care for his family. That is/was one man's story.
So then, what is left for the millions upon millions of middle-class job-seekers today? Sell hamburgers/doughnuts/coffee to the guy trying to sell them an imported flat-screen? Our neutering is nearly complete.

[TonyOnly]

If we allow them the money, which we have to do unless we want to add millions of job losses on top of an already seriously embattled economy, then it would be stupid to force them into Chapter 11 first because that would make their recovery more difficult.

[VeriteNow]

What exactly are the ramifications of GM going bankrupt (besides, obviously, the job losses)? I mean wouldn't another company like Honda or Kia, or VW rush in and buy the assets and capital at a discounted rate and start over with a new game plan? The new owners would still need workers and suppliers. Seems that in the long run only those in upper management would be out of a job. i read about a system like this once. I think it was called open market capitalism.

[TonyOnly]

The ramifications would be; there are no garantees, we would be bargaining from a position of extreme weakness, and the best case scenario is a foreign take over of America's automobile industry.

[erincnyc]

Filing Chapter 11 is a reorganization. It would not result in liquidation. It would not result in millions of job losses. The first job losses would be at the top, where the waste resides. And liquidation of unnecessary and costly assets, like the fleets of private jets. That is why the CEOs are fighting Chapter 11 so hard.