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GM Told to Prep for Bankruptcy Filing: Report
WASHINGTON, April 12 - The U.S. Treasury Department is directing General Motors to lay the groundwork for a bankruptcy filing by June 1, even though the automaker has publicly stated it could reorganize outside of court, The New York Times reported on Sunday.
A GM inflatable sign is seen during the Barrett-Jackson auto auction in West Palm Beach, Florida April 11, 2009. (REUTERS/Carlos Barria) GM is operating under emergency U.S. government loans. It has been told by the Obama administration's task force overseeing its bailout that it must cut costs and reduce its debts in order to continue to receive aid.
The White House-appointed autos task force has given GM 60 days to come up with a restructuring plan and it is trying to determine whether the automaker can be a viable company.
Quoting sources who had been briefed on the GM plans, the Times said the goal was to prepare for a fast "surgical" bankruptcy.
The newspaper said preparations are aimed at assuring a GM bankruptcy filing is ready if the company is unable to reach agreement with bondholders to exchange roughly $28 billion in debt into equity in GM and with the United Automobile Workers union.
A plan under consideration would create a new company that would buy the "good" assets of GM after the carmaker files for bankruptcy, the Times said.
Less desirable assets, including unwanted brands, factories and health care obligations, would be left in the old company, which could be liquidated over several years, according to the paper.
Treasury officials are examining one potential outcome in which the viable GM enters and exits bankruptcy protection in as little as two weeks, using $5 billion to $7 billion in federal financing, a person briefed on the matter told the Times.
The Times sources declined to be identified because they were not authorized to discuss the process. Both GM and Treasury Department officials declined to comment, the newspaper said.
Last week, GM's chief executive said the automaker wanted to restructure out of court, but also preparing for a bankruptcy filing.
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5 Comments so far
Show AllLet GM fail already and quit bailing them out. It's time for that corporate weasel to fail for stifling innovations and creativity from non-monied individuals when it comes to developing new methods of transportation. GM is the reason why my cousin couldn't fulfill his dreams of inventing better auto technologies and then running a local small business out of it but was instead relegated to being a car mechanic. Usually, I wish no one or business ill will but in the case of Big Auto and its history of long term crimes of stifling creativity and even public transportation, I'm prepared to make an exception. I pray that Big Auto falls like Humpty Dumpty and burns in hell. It's time to go back local creativity, innovation, and production and stop allowing Big Auto to buy out their technologies and/or issue frivolous lawsuits. And it's high time to get our public transportation infrastructure improved because I myself would gladly take a metro light rail any day over driving if I could.
DEATH TO BIG AUTO !
JENNIFER,
It's the workers at GM who lose if and when they close. The over-paid pencil pushers (executives) started moving production overseas, decades ago, and for the plants remaining in the United States, they wanted to maximize profits and produced gigantic pickup trucks and SUV's rather than smaller, reliable, fuel-efficient vehicles. The automotive engineers designed what the higher echelon execs wanted. How about turning over the "keys" of management to the workers, and let them resume manufacturing vehicles that people want and could afford, and with their union contracts in place, with no concessions.
And yes, the U.S. is a disgrace when it comes to public transportation. I love the light rail and it is needed across America.
I can't comment on your cousin's plight.
The people need to come together and demand these things. Naomi Klein's husband, Averi Lewis, made a documentary about workers in Argentina taking over a closed factory and making a success out of it. It can be done here as well.
Ok, I didn't mean to go hard on the workers although they're going to have to find new employment in any case and I think they're already screwed at this point. Thank you for more information on how the production went overseas even in auto. Executive control must go no doubt.
The United Auto Workers is pro-bailout. It's in cahoots with management. The UAW wouldn't think of writing anything about the 2001 Argentina workers taking over factories. Google Argentina site:uaw.org
Quoting guanabee.com on Argentina: '''during the 2001 economic crisis ... the fired employees...after taking over the closed factories, many organized into cooperatives with “democratic worker management” and started up production again. It wasn’t a ubiquitous occurrence, but enough factories were taken over (about 170 factories with a total of ten thousand workers) to make it a significant trend. Explained a worker from the Zanón ceramic tile factory;
“We formed the co-operative with the criteria of equal wages and making basic decisions by assembly; we are against the separation of manual and intellectual work; we want a rotation of positions and, above all, the ability to recall our elected leaders.”
Though our thoughts immediately jump to socialist ideology, the workers activism in Argentina wasn’t explicitly political. Rather, some argue, it was simply born out of the need to make a living, and the workers’ awareness that they were getting the shit end of the stick, for no legitimate reason. Or to put it more technically;
The legal and political case for worker control in Argentina does not only rest on the unpaid wages, evaporated benefits and emptied-out pension funds. The workers make a sophisticated case for their moral right to property - in this case, the machines and physical premises - based not just on what they are owed personally, but what society is owed. The recovered companies propose themselves as an explicit remedy to all the corporate welfare, corruption and other forms of public subsidy the owners enjoyed in the process of bankrupting their firms and moving their wealth to safety, abandoning whole communities to economic exclusion.
The idea of workers “owning” the place they work in goes against what we’ve been taught about private property rights, but in an economic situation like 2001 Argentina and present day America, maybe these kinds of takeovers could be an innovative way for workers to get their compensation.'''
You make the case for syndicalism and the IWW concept of workplace unionism at each factory or place of employment rather than a national union which tends to be complacent and cozy with management after awhile. Good post, RTDRURY.