This is what the headline will read on papers at some point in 2009 if the government hands over money. Here is the problem, GM does not want to file Chapter 11 bankruptcy. Why you ask? It is because if they do, management has a better than even chance of getting bounced. Simply put, management and GM’s Board of Directors for that matter have been unable to take the company out of the tailspin that they both put the company in. Delaying an inevitable Chapter 11 filing may very well put the company in a place where it cannot recover and go out of business.
Neither management, nor the Board of Directors deserve to stay at the helm for one reason… they failed, yet they continue to take money off the top to enrich themselves.
The problem with a government loan at this point to avert Chapter 11 bankruptcy is that the US Government is not capable of making the right decisions for the company to solve its woes.
The only way any auto manufacturer to survive this is to lower their costs, improve efficiencies and build what the market wants. No government czar, agency or committee is equipped to manage the wholesale changes that need to take place. The only mechanism that exists and works is the protections from creditors associated with filing for Chapter 11 bankrupcy. It’s not clean, it’s brutal, people from all over will feel pain, but it is the only chance the US Auto Companies have of surviving. Spending billions now to keep them from doing what they must ultimately have to just puts the American Taxpayer in line at the Bankrupcy Court hearings that will ultimately have to come.