Monday, November 17, 2008

General Motors and Bankruptcy

Business Week has a good, balanced article on the pros and cons of various scenarios for General Motors, as it pertains to a potential Chapter 11 filing. The article does a very nice job of pointing out how the government may actually step in to help facilitate an orderly Chapter 11 restructuring. In other words, the government might not execute a bailout to help GM avoid bankruptcy, but instead, would provide funds to help GM work through a Chapter 11 filing with the least amount of disruption to the rest of the economy. The article also points out that a successful Chapter 11 restructuring would put a great deal of pressure on Ford and Chrysler, as they would then face a domestic competitor with potentially much lower costs due to the restructuring. Thus, any bailout would have to consider how to deal with all three firms, not just GM.