• News
  • Celebrities
  • Finance
  • Crypto
  • Travel
  • Entertainment
  • Health
  • Others

Bush Presses for Impossible Out of Court Restructuring for GM, Chrysler

President George Bush announced that General Motors and Chrysler will receive $13.4 billion in loan money from the Wall Street bailout fund, in a move to keep the companies afloat through March. He also wants to see Congress allocate another $4 billion for bridge loans.

By the Spring, the auto makers will need to provide the White House with a restructuring plan that demonstrates viability.

Bush’s announcement is similar to the proposal that died in the Senate a few weeks ago, when the lame-duck, largely unpopular president didn’t have the political clout to twist the arms of Southern Republicans with foreign car manufacturers plants in their states to sign on.

To take a step back from the politics at work, it’s important to note that Bush is essentially asking the car companies for a rapid, bankruptcy-style restructuring outside of the court system. In bankruptcy court, the end goal is to come up with a viable restructuring plan that creditors agree to support. The clear upside to an out-of-court bankruptcy is that the companies get to continue to operate without the stigma of Chapter 11, which auto executives and some experts say would drive down already-dismal sales. But, at the same time, there are many challenges, perhaps insurmountable, to an out-of-court restructuring.

Here’s the kicker. Normally, a company can’t just go to it’s creditors and say, look we’re broke, we are only going to pay you 40% of what we owe you. Under Chapter 11 protection, that’s exactly what happens. It works because creditors are pooled into groups. The company needs to build consensus, not win over every creditor. The exact rules vary by type of debt and amount.

In the next few months, GM and Chrysler are going to need to put together plans by working with individual creditors, rather than pools or classes of lenders and other interests (unions, suppliers, etc.) That doesn’t make for an expedient process.

Which brings me to my next point. Even though it is easier to reach agreements in bankruptcy court, the negotiations take time. Several experts I spoke with last week said a GM bankruptcy process would take years. Guaranteed. So, the White House expectation that GM and Chrysler can put together this plan in a matter of three months is pretty much impossible.

Bush said today that if these companies can’t come up with a plan by March 31, they’ll have to pay back the loans. Presumably, the companies will be forced into Chapter 11, unless the next administration or Congress takes serious action.

Discussion & Comments (0)

    Recent Articles

    • Things You Should Know about North America

      Things You Should Know about North America

      Get to know more about North America.

    • Eurovision 2010 Paula Seling Unpredictable Contest

      Eurovision 2010 Paula Seling Unpredictable Contest

      Paula Seling's experience on the Eurovision stage led her to declare that "Eurovision is an unpredictable contest". Which may explain the success of the young Lena from Germany, about whom the predictions before the event did not offer much chances for victory.

    • VIPRow.me - The Best Sports Streaming Website Today

      VIPRow.me - The Best Sports Streaming Website Today

      Have you ever contemplated creating a user-friendly site dedicated to sports-related free live streaming channels?

    • Learn How To Download, Install, And Use The Xnxubd 2022 Frame App

      Learn How To Download, Install, And Use The Xnxubd 2022 Frame App

      XNXUBD 2022 Nvidia users are able to watch thousands of videos and other contents online. XNXUBD 2022 Nvidia New is a piece of software that enables people to watch videos online without having to pay for memberships. On a graphics card, the XNXubd also provides some of the best gaming and virtual reality experiences.

    • Xvideostudio Video Editor Apk Free Download For Pc Full Version In 2022

      Xvideostudio Video Editor Apk Free Download For Pc Full Version In 2022

      A new edition of the Video Editor Apk for xVideostudio.Video Studio has all the latest features, including support for multiple video download formats in HD, FHD, and even 4K resolutions.

    • 9 Best Lotion For Masturbation - Popular Choice For 2022

      9 Best Lotion For Masturbation - Popular Choice For 2022

      Masturbation is a common activity for men and women. It's a natural and risk-free way to explore your body, experience pleasure, and release sexual tension.

    • Reasons Why You Need To Stop Watching Movies From Sflix

      Reasons Why You Need To Stop Watching Movies From Sflix

      Without having to sign up or pay anything, you can watch movies online for free with SFlix. It has more than 10,000 movies and television shows.

    • Coi Leray Mom And Dad's Family History & Wife, Explained

      Coi Leray Mom And Dad's Family History & Wife, Explained

      Coi Leray Collins (born May 11, 1997) is a rapper from the United States. Leray started publishing songs to SoundCloud in 2014, and in 2018 she released her breakthrough track "Huddy" as well as her first mixtape, Everythingcoz.

    • Listen And Download Music On MyFreeMP3 For Free

      Listen And Download Music On MyFreeMP3 For Free

      Are you in a bind and looking for a place to obtain free mp3 songs? Never again will you need to bother, since this article has everything necessary to obtain your solution. Download free music from MyfreeMP3.com, one of the world's most popular websites.