GM: Bankruptcy Not A Viable Option

(AP)  General Motors Corp.'s board of directors does not consider bankruptcy protection a viable option to solve the company's financial troubles, but it has discussed Chapter 11 because it has a legal duty to do so, a spokesman said Saturday.

Century-old GM, an icon of American manufacturing, has been battered by a plunge in car sales as American consumers tighten their belts and shift away from the big moneymaking pickup trucks and SUVS that have long been the staples of GM's lineup.

GM, which has slashed jobs and closed plants since early in the decade, has warned that it could run low on cash by the end of the year unless it gets a taxpayer-funded rescue from the government.

"The board has a responsibility to keep all options open considering the circumstances," said Vice President of Communications Tony Cervone. "Chapter 11 protection is not a viable option because it doesn't fundamentally address the issues at hand today."

The board, which has been meeting regularly by teleconference since the company's finances worsened, agrees with Chairman and CEO Rick Wagoner that bankruptcy would be disastrous for the company, Cervone said.

Wagoner has said it would scare away customers who would not make a big-ticket purchase from an automaker that is under court protection.

Instead, Cervone said the board supports Wagoner's strategy to seek congressional approval of low-interest government loans, getting the company through its liquidity problems until the U.S. auto market recovers and it can be profitable again, Cervone said.

"The board continues to support management and has continued to express support for management," Cervone said.

Wagoner, in testimony to the Senate Banking Committee on Tuesday, said that independent research shows 80 percent of consumers would not consider buying a car from GM if it were in bankruptcy.

Bankruptcy experts say the company may not be able to pay all its bills, and that some parts suppliers may start demanding cash from GM upon delivery. GM, though, may be able to negotiate terms from suppliers whose fates depend largely on the company's success.

Wagoner, Ford Motor Co. CEO Alan Mulally and Chrysler LLC CEO Robert Nardelli appeared before Congress this week seeking $25 billion in low-interest loans, but were drubbed by criticism from members of House and Senate committees.

Instead of leaving Washington with a commitment for the bailout loans, the three headed back to Detroit empty-handed, rebuffed by lawmakers who were upset that the trio flew to the nation's capital in separate private jets to ask for aid.

Lawmakers also criticized the CEOs for appearing without a solid plan and for allowing high labor costs that put them at a disadvantage with their Japanese competitors.

In a letter to the auto executives released Friday afternoon, House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid demanded a detailed accounting by Dec. 2 of the companies' financial condition and short-term cash needs, as well as their plan to achieve long-term viability.

The Democrats also called on the automakers to show how they would ensure that the government would be reimbursed and share in future profits, eliminate dividends and lavish executive pay packages, meet fuel-efficiency standards, and address their health care and pension obligations if they get the federal help.

The Bush administration sharply criticized the Democrats for departing Washington for a congressional recess without acting on a rescue for the car makers.

GM is considered by many to be in the worst financial shape of the three automakers. The company spent $6.9 billion more than it took in during the third quarter and has warned that it could reach the minimum amount of money needed to run the business by year-end.

GM already has cut expenses and has delayed for two weeks reimbursements to dealers for sales incentives such as rebates.
By AP Auto Writer Tom Krisher

[lilly1232]

Unskilled? hmmm well if they are unskilled you are not to bright to put you family in a car made but such stupid people then are you. May I also point out that all you educated boys are not doing to well with things either, if you were our country would not be in the condition it is in today. So hush

[tibu987]

No "bailout". Period.

The auto industry whose inept management has only been interested in their own salaries and bonuses, and has been losing billions for years building poor quality cars and trucks that don''t sell well now looks to be bailed out by the taxpayers.

Something is very wrong with that scenario.

Gimme a break. "Bailout", what hooey.

[usedeqbroker]

Mustang4mom is right on the oil money! I agree!

[4marlene]

They should just take their tin cups to big oil to bail them out. Big oil profits from the big 3 automakers, and they have tons of cash just sitting in the bank. Exxon Mobil has $75billion in the profits just waiting for permission to drill. Why not invest in the very cars that need their product?

[helloall34]

The current labor contracts are reasonable for GM to compete, but the old ones killed the company. They made $20-30 an hour and had a pension that included lifetime health benefits on top of that. Workers today can''t comprehend having a "pension" and the idea of health care for life would be so unreal to us that it''s hard to put into words...

We need universal health care in this country for multiple reason. At the top of the list of reasons is that it''s the right thing to do.

Workers are now responsible for their own retirement, but they essentially have to foot the bill for the current retirees (until they die off). If the company declares bankruptcy one thing we are doing is throwing these retirees to the wolves.

[cbs_oliver]

Auto workers make $29.78 per hour. With all benefits added their cost to the auto industry may be as high as $41.00 per hour.

The accounts which pay retired auto workers should already be fully funded.

Republicans and other groups who hope to profit by *** American workers so that they make no more than illegal immigrants are pushing some double counting double talking BS about American worker compensation. Despicable slime.

[opedanderson]

Fine. Bail them out. But they have to give up the jets. ALL of them........

I know it''s only pocket change in the grand scheme of things but they represent their arrogance and lack of understanding of their situation and THEY MUST BE SOLD!!!!!!

[hennighg]

I had a friend who said the same thing. Didn''t work for him, either.

[billh971]

The big 3 (actually Chrysler is in 4th place) should not get any money. All 3 are different situations. Ford needs the least money. Mulaly is a good business man. Ford was smart enough to mortage the place while credit was available and get a good 25 billion war chest. They are making money in Europe. Chrysler should be shot and put out of our misery. Divisions sold off to the highest bidder. GM, well it has been dieing for along time. Go to GM Death watch web site. GM''s ceo and directors should be fired for runing the company in the ground. I personally like the tar and feather method. Not rewarded. They should file bankruptcy allowing wage cuts, benifit reductions to all employeess. All UAW contracts renegotiated at lower wages. All supplier contracts renegotiated. All ceo and board members $1 a year and stock options until profitability. Axe all divisions except Chevrolet, Cadillac, GMC Truck. Sell off and close all unecessary divisions (no Pontiac, Buick, Saturn, Hummer, Saab). Especially get rid of ALL corporate jets. I don''t understand why the share holders let this bunch of idiots run a good company dry?

[daffy64]

What''s the use of bailing out an industry that will ultimately fail? Unless North American workers are willing to work for the same pitiful wages as those in South America and Asia, how can they possibly compete?

Game over.