GM "More Open" To Bankruptcy

The Wall Street Journal reports that the usual unnamed “top executives” are saying GM is warming to the idea of bankruptcy after all. “The change in thinking, combined with the disclosure Thursday that GM’s auditor has raised ‘substantial doubt’ about the car maker’s ability to keep going, appears to move GM closer to the possibility it will file for reorganization.” Something about staring at the hangman’s noose brings a new clarity of thought to the fore. The journal’s new owner seems to have brought a bit of dry British humor to the biz: “The increased threat of bankruptcy could prod bondholders into making concessions, since these investors are said to believe a bankruptcy reorganization could harm their holdings, according to a person familiar with their thinking.” Wow, those bond manipulating masters of the universe sure are smart!

GM’s new fantasy is that a relatively low-pain, pre-packaged bankruptcy could be done inside a 90 day window without hurting sales, or losing the top dogs their food bowls. What about all those times the company has declared bankruptcy off-the-table because it would send customers packing? No worries—expensive consultants are on the job: “GM’s bankruptcy advisers, meanwhile, have been working on a plan to mitigate the impact a bankruptcy filing would have on GM’s public image.” Meanwhile GM spokesflak, Julie Gibson, spins at tornado velocities when saying the auditors’ going-concern warning “is not fundamentally a big deal.” Apparently not everyone has gotten to the acceptance phase yet.

Meanwhile, politicians and bureaucrats in Washington continue to ponder, pontificate and punt. “Administration officials are still weeks away from making a decision on how to assist the struggling auto makers. The negotiations with GM and Chrysler LLC are supposed to conclude by March 31, but with so many issues unresolved, people involved with the talks say the effort could slip into April. Administration officials who are dissecting GM’s 117-page viability plan said they weren’t surprised by the starkness of the auditors’ assessment.” But tell me this, why is it a negotiation? Beggars don’t negotiate, they beg.