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Marwil argues that even though GM may have reached a deal with some major bondholders there is no guarantee the agreement will lead to a fast-track bankruptcy process. "It's not a deal if it's only 20% of the bondholders agree, and it doesn't mean the plan will succeed. It just means the government has support now from some bondholders, and bankruptcy now seems like a foregone conclusion," Marwil explained. It's widely expected that GM will file for bankruptcy June 1, the deadline the government set for the automaker to present a restructuring plan. Should it file, the government is expected to take a similar approach to a GM bankruptcy as it did with Chrysler LLC. (The Deal Pipeline subscribers, see story.) GM in turn hopes to use the government's assistance to exit the bankruptcy process in 30 to 60 days, which will likely be a bumpy ride, according to MarwiI. "I think the greatest challenge will be doing it right the first time and emerging from bankruptcy poised for success. Who knows how long the bondholders will fight? This will be the biggest bankruptcy ever so there are a lot of issues to get resolved," he said. Marwil, who told Dealscape back in January (see video below) that the auto bailout would not be sufficient in stabilizing Chrysler and GM and that bankruptcy was necessary, believes that taxpayers will bear the brunt of GM's pains. He said: "I think the loser in this deal is the entire country. The government's interference with free enterprise is unnecessary. It will certainly avoid a lot of pain in the auto sector, and I understand why the government is doing it. But I think it is placing the welfare of a small sector of society ahead of free market capitalism and in some cases the law." After GM files for bankruptcy, Marwill predicts the auto industry
will feel a ripple effect and eventually slim down as many suppliers
close. - Maria Woehr Follow me on twitter @newsgirlmw Proskauer's Marwil on Chrysler's, GM's future Payday! GM pays 90,000 workers early
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In an interview with TheDeal.com, Jeff Marwil, a partner at Proskauer
Rose LLP, says that the government should not have gotten involved in
General Motor Corp.'s (NYSE:GM) troubles and what may become the
largest bankruptcy ever.
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