Sunday, April 5, 2009

GM is softening opposition to bankruptcy

General Motors new CEO Fritz Henderson does not seem to be opposed to bankruptcy. He is still paying lip service to the idea GM and their stakeholders can work out a deal on their own, but he seems resigned to an inevitable restructuring through the court system. Bondholders have hesitated to exchange their debt for stock. Bondholders get in line in front of stockholders during bankruptcy proceedings. The UAW leadership seems unable to find the 'cahones' to make serious cuts in member wages and benefits. Undoubtedly, the leadership would face a serious backlash if they accepted the kind of draconian reductions that will be required to save GM. The Obama Administration is treading lightly for fear of angering union members. This is why Chrysler and GM were give more time to arrange deals. There is little expectation any deals will emerge. This extension provides cover for the Obama Administration. President Obama can claim he did everything possible to protect the UAW. The best solution for everyone now(except GM stockholders) is to allow GM to go into a structured bankruptcy. Of course,there will be massive finger pointing when this occurs. President Obama has spent billions of our tax dollars to insure the UAW doesn't point the finger at him.

GM CEO open to bankruptcy 'if it's required'

General Motors Corp. is softening its opposition to bankruptcy reorganization a little more, with new CEO Fritz Henderson saying in an interview broadcast on Sunday, "if it's required, that's what we'll do."

GM still prefers to do its restructuring without bankruptcy protection, Henderson said in an interview taped by CNN Friday for its program "State of the Union."

Henderson's predecessor Rick Wagoner was sacked last month after the federal auto restructuring task force determined he wasn't restructuring fast enough or deep enough. Wagoner had resisted bankruptcy, fearing it would drive customers away and force GM into liquidation.

Henderson said the task force and President Barack Obama both indicated that bankruptcy protection "may very well be the best solution for the company to achieve these goals, which is why when you look at the situation, we said, 'OK, we'll spend the time to try to complete the work, more aggressive work, outside of the court process, but if it's required, that's what we'll do.'" (excerpt) read more at

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