GM Bankruptcy Inevitable?

Lawyers and car industry experts alike are all saying that a GM bankruptcy is all but inevitable in the coming weeks. Judging from all the various signs, it’s hard to make a case against a bankruptcy.

Among the issues GM faces include working out a deal with the union, closing more factories, persuading bondholders to swap $27 billion in debt for risky stock, and the fact that cars are just not selling in the numbers they once were.

Added on top of these issues is the sentiment that would be buyers already see GM as being bankrupt and not wanting to purchase a vehicle from them.

Keep in mind, all of these issues have to be settled within the next 3 weeks in order to get under the June 1st deadline the government has set in stone for completing its restructuring plan.

According to Stephen J. Lubben, a professor at Seton Hall University School of Law, “I just don’t see how it’s possible, given all of the pieces.”

Although company executives said last week they would still prefer to restructure out of court, experts say all GM is doing now is lining up majorities of stakeholders to make its court-supervised reorganization move more quickly.

“If we need to pursue bankruptcy, we will make sure that we do it in an expeditious fashion. The exact strategies I’m not getting into today, but we’ll be ready to go if that’s required,” Chief Executive Fritz Henderson said last week.

One thing with Chapter 11 bankruptcy laws, GM could continue to operate under court protection and still try to get rid of debt.

There are just so many unanswered questions and issues facing GM.

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