[Mail and Globe] carmaker General Motors would likely not be swift or simple despite the best efforts of the United States Treasury Department, turnaround experts warn. That's because court-supervised bankruptcy proceedings are essentially democratic,
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"They all have legal claims, and I don't see where the administration can 'force' them to abandon those claims," said Stephanie Brinley, an analyst with AutoPacific. "Why agree to something GM wants if you think the law is on your side and a bankruptcy judge might decide in your favour?"
The New York Times reported on Monday that the Treasury Department was directing GM to prepare for a bankruptcy court-supervised restructuring despite the company's public contention that it could still reorganise outside court.
| $30 billion from the public purse into the pot, and now they decide to go to bankruptcy ... |
One option under discussion is to create a new company that would buy GM's "good" asset and leave the less desirable assets, factories and healthcare obligations to be gradually liquidated, the report said.
"Conceptually it makes sense. But there are some serious legal issues that have to be overcome," said Brad Coutler, an analyst with O'Keefe & Associates, which specialises in turning around distressed firms.
Objections from stakeholders have complicated the bankruptcy of GM's former parts supplier, Delphi, which has dragged on for nearly four years and is not close to being complete.