Monday, April 6, 2009
GM speeding up preparations for bankruptcy filing to shed 47,000 jobs and drastically slash costs
Each day brings more certainty that some U.S. state is going to be decimated economically as General Motors speeds toward bankruptcy reorganization that will force a large loss of jobs and jettisoning of once highly-valued assets.
Bloomberg News reports tonight that GM is speeding up that process, which makes sense that it is better to get this step over sooner than waiting many more weeks. That was my experience from covering Chapter 11 bankruptcy cases for 10 years in Oklahoma.
The fate of the Spring Hill plant in Tennessee is anyone expert's guess, but some unbelievable things obviously are going to come from this bankruptcy. And they are going to be devastating. The ripple effect through an area economy from a giant bankruptcy is like a Tsunami. And the full impact shows up in surprising places.
Bloomberg News reports:
April 6 (Bloomberg) -- General Motors Corp. is speeding up preparations for a possible bankruptcy filing even as directors seek deeper savings this week to avoid that outcome, people familiar with the plans said.
The bankruptcy readiness focuses on forming a new company from GM’s best assets if necessary, said the people, who asked not to be named because the matter is private. The cost-cut discussions center on how to go beyond GM’s proposal to slash debt by 46 percent and shed 47,000 jobs in 2009, and will include talks with Treasury officials, the people said.
The moves are a response to President Barack Obama’s March 30 rejection of GM’s bid to keep $13.4 billion in federal loans. With bondholders and the United Auto Workers balking at concessions, a push for more savings makes bankruptcy more “probable,” Chief Executive Officer Fritz Henderson has said.
GM’s board met today and yesterday, and more discussions are planned inside GM and with the Obama administration, the people said. Obama gave the biggest U.S. automaker 60 days to restructure, without specifying what steps were needed to stem $82 billion in losses since 2004.