Bankrupcy not a Option; Performance Standards Are

3 comments November 21st, 2008

I think GM, Ford or Chrysler should not be forced into Bankruptcy, otherwise known as Chapter 11 (C-11).  This filing will allow the company to continue tooperate, but:

1. Many small-medium suppliers would get next to nothing for the payables they are owed from any of the “3″.  I talked with one local supplier the other night whose company is owed “millions” and if his customer went Chapter 11, they’d get a small part of what they are owed.  That’s the way the Bankruptcy works.  Some Rockford manufacturers could get hit hard and possibly have to file for bankruptcy as we.

2. Pension funds  for former or current employees that include GM or Ford stocks, could become worthless.  Sure, they ‘re pretty low right now, but remember Chrysler 25 years ago when it went down to $3/share?  As they got well and paid their government loans AHEAD of schedule, the stock price went way, way up.  I wish I bought then.  It could happen here if they avoid C-11.

3. Where will they get the DIP financing?  That’s “Debtor in Possession” financing from banks/government to operate while they reorganize.

If the “3″ and Congress can fashion a bailout plan, Congress MUST put some strings and oversight over the use of the loaned money and the 3’s restructuring plan which should include: executives wages of $1/year, sale of foreign assets and foreign ventures, MAJOR concessions from the UAW and the Dealer network, and a rigid timetable to implement the changes and for paying back the loans.

Well, I guess it’s not that critical as Congress is going on vacation until next month.