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Wagoner admits pre-planned bankruptcy "could work"

 
8 2,417 views Mar 17, 2009

Congressional pressure for a new CEO is strong, but no firm decisions have been made

Congressional pressure for a new CEO is strong, but no firm decisions have been made

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Both General Motors and Chrysler are fearful a bankruptcy would kill whatever consumer confidence the ailing Detroit carmakers may have left but in the latest twist of the saddening U.S. auto industry saga the CEO of GM has revealed that a pre-planned bankruptcy "could work". Rick Wagoner insists that GM could restructure and remain viable without a bankruptcy but there are suggestions the company may be considering accepting a pre-arranged bankruptcy as a final measure to gain a bailout package from the federal government – something many in Washington are demanding.

GM CEO Rick Wagoner has previously stated that bankruptcy was not an option as it would turn away more customers from buying the company’s cars. Chrysler has also previously stated that it does not intend to file for bankruptcy, however the current cash positions of both carmakers say otherwise.

Speaking with The Detroit News this week, Wagoner explained that filing for Chapter 11 would mean that there would be no other (debtor in possession) financing available except from the government – and that would have to be a “huge amount”. He still sees restructuring out of bankruptcy as the best option.


Wagoner also revealed that GM studied a pre-packaged bankruptcy filing that could see the company emerge in one to two months, though he warned that there was a strong chance that it may not work. This would result in the company being liquidated and tens of thousands of jobs being cut.

GM is currently in talks with President Obama’s auto industry task force on a daily basis and is hoping for an additional $4.6 billion in loans by April as well as up to $12 billion in a government line of credit. Fortunately for GM, the task force has said that their goal is to solve the industry's problems rather than see the carmakers enter bankruptcy.





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Comments (8)

  1. ma_JSH avatar JSH Posted: 12/4/2008 8:47am PST

    I'm currently watching the congressional hearings and it appears from the questioning that a prearranged bankruptcy or government sponsored reorganization will be coming out of this. I don't see congress forking over $34 billion based on the companies current plans.

    While the representatives of congress seem to be concerned about the damage to the economy a bankruptcy would cause they also realize that in order for these companies to succeed everyone needs to come on board. That means the management, unions, suppliers, bond holders, dealers, etc. Right now none of these stakeholders are fully on board for a reorganization.
     
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  2. ma_Jim avatar Jim Posted: 12/5/2008 7:01am PST

    After the guy from Moody's (Fitch?) testified that $34B is a down payment and $125B is more like the number, I'm not sure how bankruptcy can be avoided.

    Bold prediction. Ford gets a line of credit, the Gov agrees to be the guarantor of bankruptcy loans to GM and Chrysler is liquidated.
     
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  3. ma_HECTOR avatar HECTOR Posted: 3/18/2009 3:57am PDT

    DIIIIIEEEEE....

    For all their sins against the automotive industry these companies deserve to die. Their directors are caricatures of themselves, they're jokes. The unions are vampires sucking the blood until the body dies. The products they build are subpar.

    Why in the name of all that's good do they deserve my money?! I made a conscious decision to NOT buy a GM product. I hate their cheap and ugly designs. I hate the fact they're trying to force DRLs on all of us (lobbying Congress to make them mandatory) but don't put independent turn signals in the back. I hate the UAW always complaining when their employees make more to start than I make at my job after 12 years, and I'm white collar. They're all incompetent thieves and crooks and morons who wouldn't know how to run a car company if they had Ferdinand Piech and Carlos Gohsn directing them.

    So... DIE. If they come back to life in another form I'm all for that. But they'll have to do it without my money.
     
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  4. sidraja avatar Siddarth Raja Posted: 3/18/2009 5:53am PDT

    So, Hector, just to clarify - you think ALL GM products are bad?

    I am not a fan of a lot of them but the CTS/Malibu/G8 are all pretty damn good.
     
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  5. ma_SuperSkyline89 avatar SuperSkyline89 Posted: 3/18/2009 8:20am PDT

    Chrysler sure as hell deserves to die. After that stunt they pulled with the pulling out of Canada thing I'd go so far as to say I HOPE they die. Far as GM goes, they're newer cars are pretty good (CTS-V, Malibu, G8, ZR1) but the only one I'd ever put my own money down on is the CTS-V. For that one single car, I'm kind of hoping they survive long enough for me to be able to buy one.
     
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  6. ma_HECTOR avatar HECTOR Posted: 3/18/2009 4:16pm PDT

    I was speaking in generalities SId, which admittedly is not the best thing to do. Those cars you mention are good (allegedly).

    But the G8 started life as a Holden and some Saturns started as Opel. Basically you have no talent in the GM USA except to go overseas, get a good enough car, put a GM badge on it and then sell it as the next big thing.

    The Malibu may be almost as good as my Altima but *almost* is not what we should be expecting from General Motors for crying out loud. You know what we should be expecting? Something like the Corvette which now can compete on almost all aspects with Porsche. I want the CAN DO attitude that created that car to trickle down to the rest of the lineup.

    But for me it all boils down to two of my automotive pet peeves: if a car company forces blinding and useless DRLs on America because they're too cheapo to differentiate cars for the USA from those from Canada, and if the same company is also too cheap or just doesn't care to put independent turn signals in the back (not integrated with the brake light) then I'm not going to buy a car from that company because I don't trust or like them.
     
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  7. ma_NoNameDenton avatar NoNameDenton Posted: 3/18/2009 5:27pm PDT

    DIIIIIEEEEE....

    For all their sins against the automotive industry these companies deserve to die. Their directors are caricatures of themselves, they're jokes. The unions are vampires sucking the blood until the body dies. The products they build are subpar.

    Why in the name of all that's good do they deserve my money?! I made a conscious decision to NOT buy a GM product. I hate their cheap and ugly designs. I hate the fact they're trying to force DRLs on all of us (lobbying Congress to make them mandatory) but don't put independent turn signals in the back. I hate the UAW always complaining when their employees make more to start than I make at my job after 12 years, and I'm white collar. They're all incompetent thieves and crooks and morons who wouldn't know how to run a car company if they had Ferdinand Piech and Carlos Gohsn directing them.

    So... DIE. If they come back to life in another form I'm all for that. But they'll have to do it without my money.

    Yes the company should die an thousands should lose their job to satisfy your hatred
     
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  8. ma_aznstuart avatar aznstuart Posted: 3/18/2009 8:55pm PDT

    didn't GM just refuse a $2 Billion loan from the US Gov last week?
     
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