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Thread: Obama Said to Conclude Bankruptcy Best Option for GM, Chrysler

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    Obama Said to Conclude Bankruptcy Best Option for GM, Chrysler

    From Bloomberg.com:

    President Barack Obama has determined that a prepackaged bankruptcy is the best way for General Motors Corp. to restructure and become a competitive automaker, people familiar with the matter said.

    Obama also is prepared to let Chrysler LLC go bankrupt and be sold off piecemeal if the third-largest U.S. automaker canít form an alliance with Fiat Spa, said members of Congress who have been briefed on the subject and two other people familiar with the administrationís deliberations.
    http://www.bloomberg.com/apps/news?p...iJU&refer=home

    IMO, this is a welcome development. Such a move offers GM and Chrysler potentially their best prospect to regain viability. It gives them leverage over creditors and unions in taking the necessary steps to restructure successfully. Of course, the outcome is not assured.

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    Re: Obama Said to Conclude Bankruptcy Best Option for GM, Chrysler

    Quote Originally Posted by donsutherland1 View Post
    From Bloomberg.com:



    Obama Said to Conclude Bankruptcy Best Option for GM, Chrysler - Bloomberg.com

    IMO, this is a welcome development. Such a move offers GM and Chrysler potentially their best prospect to regain viability. It gives them leverage over creditors and unions in taking the necessary steps to restructure successfully. Of course, the outcome is not assured.
    Question: Why must they form an alliance with Fiat?
    Climate, changes. It takes a particularly uneducated population to buy into the idea that it's their fault climate is changing and further political solutions can fix it.



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    Re: Obama Said to Conclude Bankruptcy Best Option for GM, Chrysler

    Excellent news. Obama is making the right on this one. Hopefully GM will actually manage to cut of its cancerous parts and focus on rebuilding itself into a real company again.

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    Re: Obama Said to Conclude Bankruptcy Best Option for GM, Chrysler

    Quote Originally Posted by MrVicchio View Post
    Question: Why must they form an alliance with Fiat?
    I suspect President Obama is mentioning Fiat for two reasons:

    1. Fiat has expressed previous interest in such a deal
    2. Obama believes Chrysler cannot survive as an independent entity

    IMO, I don't believe a deal with Fiat should be a required condition. Bankruptcy would potentially give Chrysler more options than it currently possesses. With the burdens associated with debt, union contracts, and retirement benefits reduced substantially, other investors could emerge. A bankruptcy judge could also extract Chrysler from Cerberus Capital Management, should Cerberus remain unwilling to contribute a share of debtor-in-possession financing. If the savings from a bankruptcy-induced restructuring are sufficient, Chrysler might gain some chance at surviving on its own, though realities associated with economies of scale might still create a formidable barrier for the smallest of the three domestic automakers. Of course, there is no assurance that Chrysler would successfully emerge from bankruptcy. However, even if it doesn't, the bankruptcy route should provide for an orderly unwinding of Chrysler's operations.

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    Re: Obama Said to Conclude Bankruptcy Best Option for GM, Chrysler

    Quote Originally Posted by rathi View Post
    Excellent news. Obama is making the right on this one. Hopefully GM will actually manage to cut of its cancerous parts and focus on rebuilding itself into a real company again.
    Forbes had a plan for GM's long term growth at least 18 months ago if not longer. Dice GM into GM America and GM world. Then let GM America die. GM's financials, when broken down by segment show that its world exports are downright fabulous with excellent sales and cash flow. It's American operations are the cancer that are killing it. By splitting the firm into US and foreign operations, we can save part of the firm that actually has a future and let the part that doesn't die without bringing in the good side with it to the grave. And if GM America doesn't go, it can get huge concessions as their is no foreign revenues to support its domestic operations. No overseas cash to pay union workers. That will change their tunes.
    "If your opponent is of choleric temperament, seek to irritate him." - Sun Tzu

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