“I think it’s pretty clear that bankruptcy is not an option,” Ms. Pelosi said. But she said that the companies’ revamping plans must first pass muster among skeptical lawmakers who sent executives of the Big Three home from Washington empty-handed last month.
Its pretty clear, I guess, if you answer to Labor, that bankrupcy is not an option, but far less clear otherwise. The arguments one hears against bankrupcy are pretty weak. If these are companies that are in such bad shape that Chapter 11 won't save them, its hard to imagine Government loans will.
That said, so long as all the involved parties agree-to a viable plan, the bailout, being loans that will be paid back, won't cost taxpayers in the long run, and might save some grief in the short run.
Management appears to be presenting a plan that to a large degree mirrors the sort of restructuring Chapter 11 would produce making it more mysterious as to why Chapter 11 itself is inconcievable.
But G.M., the world’s largest automaker for decades, said Tuesday that it was in such dire straits that it would deeply cut jobs, factories, brands and executive pay as part of its plea to get $12 billion in federal loans and an additional $6 billion line of credit. G.M. also promised that it could be competitive on labor costs with Toyota by 2012.
With Chapter 11, GM could be competitive on labor costs with Toyota by 2009!
Mr. Wagoner is scheduled to drive to Washington in a Chevrolet Malibu hybrid vehicle, a concession to criticism from lawmakers who chided the Detroit executives for flying on private aircraft to last month’s hearings.
Mr. Mulally was en route to Washington on Tuesday in a Ford Escape hybrid, and Mr. Nardelli was set to leave drive in one of Chrysler’s hybrid S.U.V.’s.
Are there any unicycle manufacturers out there to bail out? Or better yet, what about the guys that make:
Mr. Henderson said that G.M. would try to negotiate a reduction in its debt from $66 billion, to about $35 billion. While he would not elaborate, the company was expected to ask bondholders to take equity in exchange for reducing their payout on long-term bonds.
G.M. will also seek to cut its labor costs by reopening its contract with the U.A.W. Possible cost cuts in the contract include eliminating job security provisions, including the so-called jobs bank that pays idled workers when their plants close.
So the plan is turn debt holders into equity holders and restructure labor agreements. But chapter 11 is not an option?
The article leaves open -- tho certainly Congress certainly should not -- the amenability of the bondholders and the UAW. It would be irresponsible of congress (which I suppose is perhaps rather more imaginable then Chapter 11), to fund the bailout without being assured in some manner of the co-operation of these other stakeholders.
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