According to the task force's fact sheet, neither Chrysler's nor GM's viability plans were "sufficient to justify a substantial new investment of taxpayer resources" because they did not "establish a credible path to viability". Also apparent in the terms and tone of the fact sheet is a definite disparity in how GM and Chrysler are viewed. While the administration has full confidence that GM can be re-built into a viable company, if Chrysler does not make certain key goals, it will be left on its own to sink or swim - with the clear expectation that it will sink like a stone.
Some of the key findings of the task force included a suggestion that a managed bankruptcy for both GM and Chrysler may be the best path if out-of-court settlements with major creditors can't be reached. The team also approved Chrysler's alliance with Fiat, giving Chrysler 30 days to complete the deal - but only because it does not find Chrysler to be viable as a standalone company. If Chrysler and Fiat to join forces, up to $6 billion in additional loan funds could be made available. Fiat will have to settle for a smaller stake of Chrysler until U.S. government loans are repaid, however, with some sources indicating a cap between 20% and 35%.
GM will now have roughly two months to restructure into a viable company under its new leadership, with the majority of the board of directors to be replaced in the next several months. The new leaders will have to work down the organizational flow chart slashing and chopping brands, models, workers and dealers.
In order to get the next round of government funding - assuming GM and Chrysler meet the new terms of the task force - there will be some other changes to be made as well. Almost all outstanding debt of both GM and Chrysler will have to be eliminated through asset sales or whatever other means possible.
While the government is keen to see both companies remain in private shareholders' hands, it’s also calling for greater cooperation from GM's bondholders. Currently bondholders are finding the restructuring plans to be detrimental to their interests, even though allowing the company to go bankrupt would mean that their bonds are worthless.
Underlying all of this is a commitment by the Obama administration to keep the warranties of both GM and Chrysler intact during the 'turnaround period', and the appointment of Edward Montgomery, a former Deputy Secretary of Labor, to the position of 'Director of Auto Recovery' - or 'car czar' - to help ensure impact on workers and industry-dependent communities is minimized.