GM Probably (Finally) Heading To Bankruptcy
After skillfully managing the bailout of GM and throwing billions of dollars in taxpayer money at it, our man Timmy (Geithner) has told GM to prepare for bankruptcy:
General Motors Corp. is believed to be preparing to file for bankruptcy by June 1 after being directed to plan for a filing by the U.S. Treasury Department, according to a report Sunday in the New York Times.
The Times, quoting unidentified sources, said the Treasury Department has directed officials at General Motors to lay the groundwork for a “surgical” bankruptcy filing that could last as short as a few weeks for portions of the company. Those portions would be the “good” parts of the company, and the “less desirable” parts of the company would remain in court for much longer and possibly be liquidated, according to the Times.
One has to wonder who gets to determine what the “good” parts are, but that said, if the following is true, it won’t be GM’s present “health care obligations”.
The parts of GM that may get bogged down in a lengthy court restructuring or liquidation include the “unwanted brands, factories and health care obligations,” sources said in the report.
That should fire up the UAW. The union won’t be the only one who isn’t going to be happy with an attempt to rush through a GM bankruptcy.
A report in the Wall Street Journal on Sunday said that any attempt at a “quick” bankruptcy for GM could face legal challenges from bondholders of the company.
As they have every right to do — but it certainly isn’t going to make the bankruptcy either surgical or short. My guess is the bondholders are realizing that pirates aren’t only to be found off the coast of Somalia.