Life in the Fast Lane

GM has recently made headlines, along with Chrysler, by contemplating possible bankruptcy court proceedings. President Barack Obama has consistently been calling this a last ditch resort to even more difficult options facing the car industry. In the long run, any kind of bankruptcy protection would end up hurting the future of the American economy anyway. Shareholders will lose interest in investing with such companies and ultimately leave it with no other choice but to shutdown or file for Chapter 11 protection. According to Wall Street Journal writer Michael Levine, in a November 17, 2008 Op-Ed , there are indeed ways that bankruptcy would ultimately mean the end of GM:

“reorganization under Chapter 11 of the bankruptcy code. If GM were told that no assistance would be available without a bankruptcy filing, all options would be put on the table. The web could be cut wherever it needed to be. State protection for dealers would disappear. Labor contracts could be renegotiated. Pension plans could be terminated, with existing pensions turned over to the Pension Benefit Guaranty Corp. (PBGC). Health benefits could be renegotiated. Mortgaged assets could be abandoned, so plants could be closed without being supported as idle hindrances on GM's viability. GM could be rebuilt as a company that had a chance to make vehicles people want and support itself on revenue. It wouldn't be easy but, unlike trying to bail out GM as it is, it wouldn't be impossible.”