Bush considering orderly auto bankruptcy

[StageLeft]

Link

White House press secretary Dana Perino said Thursday, "There's an orderly way to do bankruptcies that provides for more of a soft landing. I think that's what we would be talking about."

I know some rumors have been along these lines, but it appears that if Bush is in office long enough to help motivate it, this is how things will go. For GM and Chrysler it may be the best thing. However, I think they can at least hang on until Jan 20, and Obama is unlikely to watch this happen, which turns this into an academic exercise; Bush will be unlikely to see them through such a bankruptcy unless they want it.

 

[dmcowen674]

Not enough auto threads? 😕

 

[TallBill]

Originally posted by: dmcowen674
Not enough auto threads? 😕

Jealous that you didn't post it first and put your troll spin on it?

 

[Skitzer]

I'm convinced the big 3 will get bailed out in Jan. I don't see any bankruptcies happening.

 

[dullard]

Originally posted by: Skitzer
I'm convinced the big 3 will get bailed out in Jan. I don't see any bankruptcies happening.

I'm convinced that the big 3 will get bailed out and that Chrysler will STILL go bankrupt. Possibly GM too.

 

[dmcowen674]

Originally posted by: dullard

Originally posted by: Skitzer
I'm convinced the big 3 will get bailed out in Jan. I don't see any bankruptcies happening.

I'm convinced that the big 3 will get bailed out and that Chrysler will STILL go bankrupt. Possibly GM too.

I don't see how GM, Ford and Chrysler will be around.

They want the Unions gone.

 

[dyna]

Originally posted by: Skitzer
I'm convinced the big 3 will get bailed out in Jan. I don't see any bankruptcies happening.

Orderly bankruptcy sounds like backruptcy + bailout. Breakup union and money from the govt. In the end, bad for the union and better for GM/Chrysler.

 

[dphantom]

Originally posted by: Skoorb
Link

White House press secretary Dana Perino said Thursday, "There's an orderly way to do bankruptcies that provides for more of a soft landing. I think that's what we would be talking about."

I know some rumors have been along these lines, but it appears that if Bush is in office long enough to help motivate it, this is how things will go. For GM and Chrysler it may be the best thing. However, I think they can at least hang on until Jan 20, and Obama is unlikely to watch this happen, which turns this into an academic exercise; Bush will be unlikely to see them through such a bankruptcy unless they want it.

Personally, I think the orderly bankruptcy where everything is settled ahead of time is the way to go. Better for everyone including unions because otherwise, we will be either footing an enormous ongoing bill well in excess of $100 billion or Chrysler and maybe GM liquidate meaning the loss of hundreds of thousands of union jobs.

 

[Thump553]

One more achievement for the Bush legacy, and one more mess for Obama to clean up after Bush finally leaves office.

This talk of an orderly Chapter 11 is pure nonsense-every Chapter 11 is orderly and the law is well laid out. I wonder how GWB proposes to change the bankruptcy law so that the auto companies can honor the claims under existing warranties over other general creditors? If those claims aren't honored there is no sense wasting even the miniscule filing fees for a Chapter 11-go straight to Chapter 7 and liquidate them, for GWB will have put the final nail in the coffin.

It may be possible for the auto company creditors to jointly agree to hold off on action until the moron in chief is gone. Hopefully they are more patriotic than GWB is.

Edit: PS-GM stock has dropped 19% today alone-it looks like the investors don't want to take the risk of ending up with worthless stock.

 

[dullard]

Originally posted by: Thump553
This talk of an orderly Chapter 11 is pure nonsense-every Chapter 11 is orderly and the law is well laid out. I wonder how GWB proposes to change the bankruptcy law so that the auto companies can honor the claims under existing warranties over other general creditors? If those claims aren't honored there is no sense wasting even the miniscule filing fees for a Chapter 11-go straight to Chapter 7 and liquidate them, for GWB will have put the final nail in the coffin.

Yes, bankruptcy is generally orderly. But, they tend to be slow. If the government really wanted to do it, this whole bankruptcy thing could be handled in days. (1) Loan enough money so that they have no creditors other than the US government and the existing warranties. (2) Pre-negotiate the post bankruptcy contracts - mostly with the union. (3) Have the judge order new warranties be handled by a financially sound 3rd party, heck even pay a third party to take the existing warranties. It'll be costly and painful, but a new phoenix will emerge from the rubble.

 

[dphantom]

Originally posted by: dullard

Originally posted by: Thump553
This talk of an orderly Chapter 11 is pure nonsense-every Chapter 11 is orderly and the law is well laid out. I wonder how GWB proposes to change the bankruptcy law so that the auto companies can honor the claims under existing warranties over other general creditors? If those claims aren't honored there is no sense wasting even the miniscule filing fees for a Chapter 11-go straight to Chapter 7 and liquidate them, for GWB will have put the final nail in the coffin.

Yes, bankruptcy is generally orderly. But, they tend to be slow. If the government really wanted to do it, this whole bankruptcy thing could be handled in days. (1) Loan enough money so that they have no creditors other than the US government and the existing warranties. (2) Pre-negotiate the post bankruptcy contracts - mostly with the union. (3) Have the judge order new warranties be handled by a financially sound 3rd party, heck even pay a third party to take the existing warranties. It'll be costly and painful, but a new phoenix will emerge from the rubble.

Dullard is spot on. A regular Chapter 11 would take months if not years to complete. Look at Delphi as one example. The damage that would be done to Chrysler/GM if that happened would be enormous and whatever did end up coming out of Chapter 11 would be nothing but a shell of wht the companies are today. If you want to quickly move most auto production to foreign makers, then a long regular Chapter 11 is the surest way to that.

If you want a viable American auto industry, then a quick resolution is absolutely necessary.

 

[Lemon law]

I agree with Barney Frank, allowing bankruptcy would allow the big three to simply walk away from their debts, which in turn will cause the bankruptcy of countless suppliers while putting their pension obligations on the public tab. Maybe penny wise but dollar foolish, and not worth a bail out if that is the end result.

 

[Squisher]

I can think of two reasons to move toward bankruptcy. One, is that during the negotiations that have taken place over the last few days one or more of the parties were resisting the changes that are necessary. Or two, to appease the popular (especially the southern republican constituency) mood in the country to let them fail.

 

[winnar111]

Sounds good. Kindly dump all the health care expenses they have.

 

[dyna]

Originally posted by: Lemon law
I agree with Barney Frank, allowing bankruptcy would allow the big three to simply walk away from their debts, which in turn will cause the bankruptcy of countless suppliers while putting their pension obligations on the public tab. Maybe penny wise but dollar foolish, and not worth a bail out if that is the end result.

I tend to think that anything Barney Frank suggests is the opposite of what we should actually do.

 

[frostedflakes]

I wouldn't be opposed to something like this assuming it can be pushed through as quickly as dullard suggests. I think the automakers need to be saved, but structured bankruptcy vs loans, I don't really care how it's done as long as it works. The UAW will be pissed, though.

 

[Double Trouble]

Originally posted by: dullard

Originally posted by: Thump553
This talk of an orderly Chapter 11 is pure nonsense-every Chapter 11 is orderly and the law is well laid out. I wonder how GWB proposes to change the bankruptcy law so that the auto companies can honor the claims under existing warranties over other general creditors? If those claims aren't honored there is no sense wasting even the miniscule filing fees for a Chapter 11-go straight to Chapter 7 and liquidate them, for GWB will have put the final nail in the coffin.

Yes, bankruptcy is generally orderly. But, they tend to be slow. If the government really wanted to do it, this whole bankruptcy thing could be handled in days. (1) Loan enough money so that they have no creditors other than the US government and the existing warranties. (2) Pre-negotiate the post bankruptcy contracts - mostly with the union. (3) Have the judge order new warranties be handled by a financially sound 3rd party, heck even pay a third party to take the existing warranties. It'll be costly and painful, but a new phoenix will emerge from the rubble.

I like the way you think, where do I subscribe to your newsletter?

Spot on, nice post.

 

[Double Trouble]

Originally posted by: dyna

Originally posted by: Lemon law
I agree with Barney Frank, allowing bankruptcy would allow the big three to simply walk away from their debts, which in turn will cause the bankruptcy of countless suppliers while putting their pension obligations on the public tab. Maybe penny wise but dollar foolish, and not worth a bail out if that is the end result.

I tend to think that anything Barney Frank suggests is the opposite of what we should actually do.

:thumbsup: Agreed, anything that moron comes up with is bound to be the wrong thing to do.

 

[StageLeft]

Originally posted by: dyna

Originally posted by: Lemon law
I agree with Barney Frank, allowing bankruptcy would allow the big three to simply walk away from their debts, which in turn will cause the bankruptcy of countless suppliers while putting their pension obligations on the public tab. Maybe penny wise but dollar foolish, and not worth a bail out if that is the end result.

I tend to think that anything Barney Frank suggests is the opposite of what we should actually do.

WIN

Anywho does anybody have an idea what it would cost for the big 3 to get out from under their debt, like completely wipe it clean?

 

[MikeMike]

Originally posted by: Skoorb

Originally posted by: dyna

Originally posted by: Lemon law
I agree with Barney Frank, allowing bankruptcy would allow the big three to simply walk away from their debts, which in turn will cause the bankruptcy of countless suppliers while putting their pension obligations on the public tab. Maybe penny wise but dollar foolish, and not worth a bail out if that is the end result.

I tend to think that anything Barney Frank suggests is the opposite of what we should actually do.

WIN

Anywho does anybody have an idea what it would cost for the big 3 to get out from under their debt, like completely wipe it clean?

GM is something like $60B in debt.
actually: Total Debt (mrq): 45.16B

and Ford
Total Debt (mrq): 156.79B

 

[RabidMongoose]

Originally posted by: Lemon law
I agree with Barney Frank, allowing bankruptcy would allow the big three to simply walk away from their debts, which in turn will cause the bankruptcy of countless suppliers while putting their pension obligations on the public tab. Maybe penny wise but dollar foolish, and not worth a bail out if that is the end result.

If this is a Chapter 11, then they'll have to come up with a repayment plan. More debts would be paid off as opposed if they went through a Chapter 7 and became liquidated and most of the debts are unpaid.

 

[Thump553]

Originally posted by: dullard

Originally posted by: Thump553
This talk of an orderly Chapter 11 is pure nonsense-every Chapter 11 is orderly and the law is well laid out. I wonder how GWB proposes to change the bankruptcy law so that the auto companies can honor the claims under existing warranties over other general creditors? If those claims aren't honored there is no sense wasting even the miniscule filing fees for a Chapter 11-go straight to Chapter 7 and liquidate them, for GWB will have put the final nail in the coffin.

Yes, bankruptcy is generally orderly. But, they tend to be slow. If the government really wanted to do it, this whole bankruptcy thing could be handled in days. (1) Loan enough money so that they have no creditors other than the US government and the existing warranties. (2) Pre-negotiate the post bankruptcy contracts - mostly with the union. (3) Have the judge order new warranties be handled by a financially sound 3rd party, heck even pay a third party to take the existing warranties. It'll be costly and painful, but a new phoenix will emerge from the rubble.

A couple of problems with your solution. Loaning enough money to cover everything but the warranties would probably run hundreds of billions, maybe even into the trillion range. Think that will pass Congress when the Senate shot down a $25 billion temporary bailout package?

Your third point is also very problematic. The existing warranties are valid contracts between the previous customers and the car companies-any court action to recast those agreements would have to pass constitutional muster (not at all certain) and require new legislation. I don't see the GOP supporting legislation to walk willy nilly over contract rights, nor do I see GWB drafting and Congress adopting a rewrite of the bankruptcy code in a couple of days. The last time it was revised it was a decade long battle.

Somehow I dont see anyone trusting GWB enough to come up with a prepackaged Chapter 11 in a few days, nor do I see GWB taking any time out from his ego--polishing tour to do the heavy lifting to negotiate it. Remember also that still has to negotiate a Middle East peace agreement by the end of his term, among other things.

Someone mentioned that there has to be a repayment plan in a Chapter 11. That's true-but it doesn't have to be 100%, just more than the creditors would receive in a Chapter 7 liquidation. A 100% repayment Chapter 11 is the rare exception, in actuality.

I stick by my original assessment-GWB is weaseling out of taking any action, even if his inaction will make things far worse for the US and the next Administration. Shame on him.

 

[The-Noid]

Superb idea. Enough of the bailouts.

 

[woodie1]

Bush considering orderly auto bankruptcy - let's hope that's all he does.

Let 'em sink or swim on their own. Ford lined up financing to make it thru 2009 why can't GM?

 

[StageLeft]

Originally posted by: MIKEMIKE

Originally posted by: Skoorb

Originally posted by: dyna

Originally posted by: Lemon law
I agree with Barney Frank, allowing bankruptcy would allow the big three to simply walk away from their debts, which in turn will cause the bankruptcy of countless suppliers while putting their pension obligations on the public tab. Maybe penny wise but dollar foolish, and not worth a bail out if that is the end result.

I tend to think that anything Barney Frank suggests is the opposite of what we should actually do.

WIN

Anywho does anybody have an idea what it would cost for the big 3 to get out from under their debt, like completely wipe it clean?

GM is something like $60B in debt.
actually: Total Debt (mrq): 45.16B

and Ford
Total Debt (mrq): 156.79B

And yet GM is in a worse situation than Ford? Its revenue yearly is 180, says wikipedia, and ford's is 170.