President-Elect Barack Obama`s transition team is exploring a swift, prepackaged bankruptcy for automakers as a possible solution to the industry's financial crisis, according to a person familiar with the matter.
Obama's team has already contacted at least one bankruptcy- law firm to say that Daniel Tarullo, a professor at Georgetown University's law school who heads Obama's economic policy working group, would call to discuss the workings of a so-called prepack, according to this person.
U.S. lawmakers yesterday postponed until December a vote on whether to give General Motors Corp., Ford Motor Co. and Chrysler LLC a $25 billion bailout as an alternative solution. Automakers such as GM could use court protection to reduce debt and reject unfavorable contracts.
``It creates the environment to deal with GM's problems but limits government financial commitment,'' said bankruptcy lawyer Mark Bane of Ropes & Gray in New York.