GM: Bankruptcy Not A Viable Option

Board Of Directors Feels Chapter 11 Would Not Address Fundamental Issues Facing Automaker, Says Spokesman

(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.

[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.

[daffy64]

The United States can have auto manufacturing. That is, as long as the workers on the line are willing to accept the same kinds of wages they''d get in third world countries (lousy).

We in the west invented the free enterprise system, showed others how it worked, and now we''ve been beaten.

[jt_lancer]

My, my, my. Now Democrats want to bail out corporate fat cats. I thought Repubslicans were the only fans of corporate welfare?

Taxpayers should not be forced to subsidize the incompetence and uncompetitiveness of any company.

The Big Three auto makers have dug their own grave with their huge pensions to retired UAW workers, excessive compensation for employees and management alike.

[bigsk8fan]

seeing that the republicans have been doing all they can to destroy the american economy and export our jobs, it is no wonder they disagree with democrats plan to actually rebuild the american economy. republicans keep saying how small business is the engine that builds more american jobs. i wonder how many small business will close down when gm closes down. all the auto parts suppliers. all the restaurants near gm facilities. all the banks that get paid for the gm home owners mortgages. the list goes on and on. but you republicans keep talking. maybe you can get all america to distrust you.

[bigsk8fan]

seeing that the republicans have been doing all they can to destroy the american economy and export our jobs, it is no wonder they disagree with democrats plan to actually rebuild the american economy. republicans keep saying how small business is the engine that builds more american jobs. i wonder how many small business will close down when gm closes down. all the auto parts suppliers. all the restaurants near gm facilities. all the banks that get paid for the gm home owners mortgages. the list goes on and on. but you republicans keep talking. maybe you can get all america to distrust you.

[pensacola98]

Once again, the Republican Party shows its'' true colors in the charactar flawed approach to partnership with business. When the defense industry needed business to help fight enemies fo the US constitution, the business were there. Now, that businsesses need the GOP with a bridge loan to survive a credit crunch caused by the failure to close the Enron Loopholes left from PHIL GRAHAM''s undebated legislature of relaxed regulation, all the GOP can do is say, "We gave you tax cuts 7 years ago! Can''t you just go take your chances in bankruptcy court just like all the other businesses we killed off fighting our war?" Where is the "Mental Recession" Phil?

Without US automakers, the foriegn trade deficiets would have tripled and devalued the US Dollar to even lower levels estimated to be $2.60 to one Euro Dollar.
Unemployment would have entered the double digit values not seen since Ronald Reagan was president in 1982.

If we can''t save the very same economic system that fuels credit, houses, transports the citizens of this nation, then who can we save? What is next? Will Medical Insurers announce insolvency?

GOP robbed the USA of wealth, jobs and a healthy middle class.

[czmdm]

Blue collar workers making 30k a year cannot be too happy about the prospect of having retired UAW workers receive more than that and health insurance to boot.

The UAW and the automakers have not kept pace and build sub-standard products. The workers are way over paid. 30 years after the first OPEC embargo we should all be driving cars that get a minimum of 30mpg.

If the capitalism works then let the automakers fail and we''ll see what happens. If we bailout the automakers then why not Circuit City or any other group going through hard times?

[firehose12]

What is the difference between the United States and a poor 3rd world country like Haiti if we have no "auto-manufacturing"???

Posted by whitemale08 at 06:02 PM : Nov 23, 2008

Thanks to the UAW - the diff is about $78 an hour.
The UAW would rather see GM Ford & Chrysler go bankrupt than accept a logical wage for unskilled blue-collar jobs.

Makes simple sense. Compete or pack your bags.

[firehose12]

GM: Bankruptcy Not A Viable Option

***********************

Yes it is - break the UAW rather than taxpayers.

[whitemale08]

WOW!!!!

Another disappearance of a 100 year old industry such as ''auto manufacturing''.

What else would it take to you stupid ''globalists'' to see that we are committing SUICIDE???

What is the difference between the United States and a poor 3rd world country like Haiti if we have no "auto-manufacturing"???

NOTHING!!!!

[txgrouch2007]

At this point, the only way to salvage our nation is to just let the natural "free market" forces put at least half of the workforce out of a job.

Then there will FINALLY be a majority who has a reason to be against "free trade," and we can get rid of it once an for all.

As long as the ringmasters keep playing smoke and mirrors to keep the voters employed, nothing is going to change.