GM's Abnormal Bankruptcy

http://www.futureofcapitalism.com/2009/06/gms-abnormal-bankruptcy

NYU's Michael Levine, writing in the Financial Times, has an interesting take on how GM's bankruptcy differs from a normal bankruptcy filing:

the Obama administration overtly played favourites to get the United Auto Workers protection it would not have received under Section 1113, probably elevating costs in a way that will damage prospects for a successful reorganisation. It made and imposed business judgments on GM about what cars to make and what plants to close (and perhaps about suppliers and distribution) that no one in the government or on the task force had the experience to make and for which no one would be financially accountable. Worst of all, despite Sunday's desperate attempt to distance itself from GM's future decisions, it left its fingerprints all over the new plan. Inevitably the White House will take political and hence financial responsibility for its success, relieving pressure on management and labour to succeed.

by Editor  |  Jun 2, 2009 at 9:08 am Related Topics:  Auto Industry receive the latest by email: subscribe to the free futureofcapitalism.com mailing list