It appears that Rick Wagoner may be mulling his decision to not even consider bankruptcy, if it means getting a government bailout that could keep General Motors Corp. making cars. An undisclosed source familiar with the internal discussions at GM and Chrysler LLC has told Bloomberg that executives at both carmakers are considering
accepting a prearranged bankruptcy as the last-resort price of getting the billions from the federal government needed to keep them afloat.
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Auto executives have maintained that a prepack bankruptcy, where
terms of the restructuring are worked out before the filing, would
result in a liquidation as they feel consumers would no longer be willing to buy their vehicles. A prepack would also face the
additional hurdle of having to get the innumerable parties --
including unions, suppliers, dealers, creditors and management -- to
work out tough compromises in the little time the companies have left before
they run out of cash.
Nevertheless, after their poor showing last month when executives from
Ford Motor Co., GM and Chrysler all took private jets down to
Washington to plead poverty, Congress is making them eat some humble
pie while making sure it looks at plenty of different suggestions
before it signs off on yet another bailout. -
George White
See Bloomberg story
See Dealscape post on Chrysler's cash position
See Dealscape post on auto maker bailout
