By on March 17, 2009

Yes, you read it right. Over a nice little breakfast with the good folks at The Christian Science Monitor [reported by The Detroit News], Rick “Bankruptcy Equals Death” Wagoner said a GM pre-packaged Chapter 11 might work. Apparently, GM has “carefully studied” the idea of a 30- or 60-day, pre-packaged bankruptcy and “pointedly didn’t rule it out.” The bottom line: “It could work. It might not work.” Yup, those are the two possibilities all right. Wagoner also “revealed” that “There is no (debtor-in-possession) financing other than the U.S. government because my administration has systematically destroyed or sold off all of General Motors’ assets.” Just kidding, although Wagoner did admit Uncle Sam was the only DIP-shit in town. Oh, and Wagoner also added that a bankruptcy would “likely cost the government far more money than the Detroit automaker has sought.” Likely? How likely? Numbers? And they say a Harvard MBA isn’t worth the paper it’s printed on. Speaking of collegiate carousing, “Wagoner said the company would pare back its dealers by 25 percent in a ‘measured thoughtful aggressive way’ to ensure it didn’t hurt sales. ‘This isn’t a meat cleaver deal.'”

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8 Comments on “GM CEO: Pre-Pack C11 Could Work...”

  • avatar
    Philip Lane

    Oh, and Wagoner also added that a bankruptcy would “likely cost the government far more money than the Detroit automaker has sought.”

    He’s right. Bankruptcy would likely cost more than GM has asked for so far. Red Ink Rick didn’t say anything about how much bankruptcy would cost in relation to what GM will ask for otherwise.

  • avatar
    Robert Schwartz

    “Obama Seeks to Avoid Auto Bankruptcies: Task Force Seeks GM, Chrysler Changes Outside Court; Loans Unlikely to Be Recalled Early” by Neil King, Jr. and John D. Stoll in the Wall Street Journal on March 17, 2009 at p. B1 [$UB]

    Steven Rattner, a private-equity executive leading the team, said Monday that “I don’t think that bankruptcy is necessarily a better place for any company.”

    “It sometimes becomes a necessary place for some companies, but it’s certainly not a desired place and it is certainly not our goal to see these companies in bankruptcy, particularly considering the consumer-facing nature of their businesses,” Mr. Rattner said in an interview.

    * * *

    Administration officials also said the team doesn’t plan to recall early the $17.4 billion in government loans given to GM and Chrysler — something allowed under the loans’ terms if the companies don’t prove by March 31 that they can be viable long term.

    The administration officials said the two auto makers had already spent the cash, and that asking for the funds to be returned immediately would trigger their collapse.

    By emphasizing that bankruptcy was not a preferred option, and by removing any threat of putting the auto makers in default by recalling the loans, Mr. Rattner’s team will ease some of the pressure that has been on GM, Chrysler and their constituents to make immediate and sweeping concessions. The team, however, didn’t rule out bankruptcy as a potential option altogether.

    * * *

    Mr. Rattner indicated the Treasury is taking a close look at requests by GM and Chrysler for an additional $22 billion in loans. “They do need more money,” he said. At the same time, he said the Obama administration would not “put these companies on an intravenous drip-feed that lasts forever.”

    By the end of the month, the government plans to lay out its view on the companies’ viability and what the industry should look like in future years, Mr. Rattner said. However, those plans won’t include a comprehensive fix for the two companies. That, he said, will largely be left to the stakeholders, such as unions, management and investors.

  • avatar

    The plan is to let this linger until more than just the B&B and other more objective people say bantruptcy is the way to go. You need the general populace to see it as the best solution before you can let it happen. Democrats cannot turn their back on unions without a ground swell of support from the masses. So instead of quick resolve, we have hemming and hawing.

    The real question is how long till this happens? When is “all options are on the table” not enough for the rest of the country? It gets tiring waiting, but that is the lot in life for those who are not in control.

  • avatar

    Are there masses that really care about Union? There aren’t that many left, and even fewer who wish they were in a union.

    The public is against the GM bailout, has been from the start. This isn’t about appeasing the public, it’s about appeasing special interests and bad memories from the 90’s import hate fest.

  • avatar

    “hurt sales”!?

    Is that possible?

  • avatar

    Are there masses that really care about Union?

    Well, true, but the remaining few gave quite a lot of money to the Dem’s for the last couple of election cycles.

  • avatar
    Steven Lang

    Easy problem solved…

    1) Liquidate Chrysler

    2) Liquidate Saturn & Saab

    3) Tell the Buick/Pontiac/GMC dealerships that the strong ones can make a sizable investment in Chevrolet AND Cadillac. Thus becoming an all GM dealership. The weak ones will simply have failed businesses.

    4) Hummer? Sell it to the Arabs…. or perhaps donate it to an environmental organization that needs to construct a barrier reef near the Antarctic.


    5) Liquidate GM’s upper management. Make sure you snip the golden parachutes before they leave.

  • avatar

    The real issue is the cram down. How much leverage will the feds have over debt for equity swaps, and what kind of deal will they cut to get it done for the DIP?

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