WORLD> America
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WORLD> America
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Experts: GM bankruptcy is almost inevitable
(Agencies)
Updated: 2009-05-11 08:09
"When you look across at what the union is getting and what the government is getting, to expect them to take 10 percent is just unrealistic," he said. Cutting dealers also remains a huge hurdle, with GM hoping to shed 2,600 of its 6,246 dealerships by 2010. But dealers are protected by state franchise laws, and trying to shed them outside of bankruptcy would result in either millions of dollars in payments or multiple lengthy lawsuits, Lubben said. "That means you've got to negotiate with each one of those dealers individually." Also, GM on Friday told its major parts suppliers that it would move up payments due on June 2 to May 28. Company spokesman Dan Flores said it was being done to help the suppliers at a critical time, but he denied that the payments were pulled ahead of a potential June 1 bankruptcy filing.
It would help speed up GM's stay in bankruptcy court if it could pull together big blocks of stakeholders to agree on reducing debt or changing other stakes, said Robert Gordon, head of the corporate restructuring and bankruptcy group at the Clark Hill PLC law firm in Detroit. During its quest for government aid, GM executives said bankruptcy would severely cut their sales, with research showing that people would shy away from GM vehicles for fear that warranties would not be backed and parts would not be available. Tynan said the executives now can't change their story, even though they likely know that bankruptcy is inevitable. "They're sort of morally obligated to say 'we're intent on doing this outside of bankruptcy,'" he said. "But at the end of the day, they just want the magnitude of the restructuring to get done."
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