Bailout with a price: Chapter 11 bankruptcy

[Terri]

By JIM KUHNHENN
Associated Press
November 20, 2008

WASHINGTON (AP) -- Mention a corporate bailout in the nation's capital these days and chances are someone will offer a harsh condition to go along with it. Chapter 11 bankruptcy.

Lately, the term "prepackaged bankruptcy" has been gaining currency in the halls of Congress as lawmakers struggle with pleas for help from the auto industry.

The idea, embraced by some Democrats and Republicans, would extend taxpayer help in exchange for a company undergoing an accelerated Chapter 11 reorganization. The arrangement could represent a model, or a deterrent, for any other strapped companies considering seeking government help.

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[MamaCat]

Does anyone notice a trend here? Obama wants the Pres and the Repubs to resolve the question of bankruptcy before he takes office, knowing the unions would be furious with him if he does it, and the public will be furious at him if he just hands over $25billion or more with no bankruptcy type conditions on the automakers. The Dems pulled the same stunt for the bailout -- get the Repubs involved in unpopular causes so they could wash their hands of it when it turns sour.

Where are the real leaders in this country? They're sure not in government!

[Caliphant]

Chapter 11 might work for Chrysler; GM feels more like Chapter 7.

[jack virtus]

congratulations to the Unions, you have pretty much killed the GOLDEN GOOSE.

Why should we bail out the automakers? Say we give them the $25 billion what has changed since the big 3 blew through the last $25 billion from the banks? NOTHING!

If the Unions want to commit suicide fine, do it with private money.

[mryel]

Of course, neither the CEO's or Union Leaders want to give up anything, and they will use the pensioners as leverage. As far as the management side goes the last time they "reorganized" (getting the "old guys" out to make room for the younger, and brighter innovative young ones), it was supposed to result in a leaner more profitable company (too bad the "younger ones" simply carried on the same old practices and are now fighting to not go down the same road of their predecessors). The pension packages offered those "old guys" received, to not work, was almost as good as what received when working. And the union workers in their contracts,also get outrageous incentives to not work. In the words of Rev. White: "the chickens have come home to roost". And all the time, the consumer had to bear the cost by paying more for a less in value car. No wonder we went foreign.

Richard Trunken UAW pres. on bankruptcy: "has become effectively a device for the wholesale transfer of wealth from workers to other creditors." No way, those other creditors are keeping the workers in the non-union suppliers in work, something unions can't abide.

Greed and Power are the primary elements in this reluctance to compromise and yet they continue to "kill the golden goose".

If medical benefits for retirees is one of the arguments against accepting bankruptcy and if the government must take the place of of the lending institutions for this reorganization process, how about giving to those not eligible for medicare and or medicaid benefits as part of the package these benefits; and maybe even early SS payouts to supplement their reduced pension benefits (for those under 62/or 66). I know there would be resentment from those of us that have had to wait for these benefits and have even had to reduce our incomes to sustenance only levels;however, some of the alternatives tax payers will have to support and the damage to our economy a failed domestic car industry will cause, could be an even more bitter pill to swallow.

[streek53]

I heard a story from someone I take seriously about a guy named Jonathon Demming (sp?), who knew a lot about cars.

He was sufficiently respected that the CEOs of the Detroit automakers that they had him address them sometime in the late 80s, I think. He told them that they would have to "build in quality from the ground up."

The audience listened politely, eventually left, and give this man no more thought.

So, our Mr Demming went to the Japanese equivalent of Detroit, the Japanese Detroit, and addressed the CEOs there. They listened intently, then did everything he said.

Today, in the Japanese Detroit, there is a statue of Mr Demming.

I can remember when Southerners would get in fights over the relative merits of a Ford vs a Chevy. Not much of that in the air these days.

Offered two vehicles from the US and Japan, and both were pretty much the same deal, I would go Japanese.

I bought a used little Nissan truck in 1987. It has gotten me to where I'm goin' for 21 years. Used.

But my father, a teen Marine in WW II, passed this May, and I got his truck, a Dodge Dakota.

The Dodge is a '96. Don't think I'll get 21 years of use out of it. But...ya just cain't never tell, now can ya? It gets 20 to the country; 15 to the city.

[Sabrina]

I say---NO BAIL OUT FOR THE AUTO MAKERS OR THEIR UNIONS ----let them file for bankruptcy as other companies have had to do---re-visit their contracts - start all over - and try to stay within their budgets.
Don't fly into town at $20,000 a round trip--holding out your hand and expect us to bend over.

[jackbenimble]

When I first started reading this thread it "pre-packaged bankruptcy" sounded like an idea with some merit. One of the concerns is that if an auto company enters Chapter 11 it will inevitably result in Chapter 7 because nobody will buy a car that needs parts and warranty service from a bankrupt company that may not exist in a few months.

But then I read this:

"I'm very much attracted to the prepackaged bankruptcy idea," said Senate Banking Committee chairman Christopher Dodd, D-Conn.,

If Dodd is in favor of it, it must be a bad idea.

My guess is that it is a scam. The pre-packaged deal will be bankruptcy-lite. It will be designed to look like the taxpayers interest were served but the really hard decisions like terminating labor contracts and pension plans won't happen.

No thanks!

Regards,
Jack

[denisethemenace]

I live in an ex-urb of Detroit, and I'm with Jack Virtus, Sabrina, and JackbeNimble. The Big 3 execs had to fly back and forth in their corporate jets (excuses abounded), and not a one of them was willing to put a "For Sale" sign on the jet. It's more important to them to keep their pilots and Mr. Gettlefinger happy than to wake-up-and-smell-the-coffee. Fine. Would you like a piece of cake with that......on the way to the guillotine?

[utexas]

Yes, that’s the only way to do it. Tell the bloated, overpaid, greedy unions if they want a job they have to give up some serious benefits and pay packages or they can go join everybody else in the unemployment line. At the same time the corporate bigwigs need to take a serious pay cut and forget about bonuses until the debt is paid off. Otherwise do what Eastern Airlines did and just shut down since they can’t compete with the Japs in this economic environment. If they do hope to survive and go the United route, the unions have to take some major job losses and pay and benefit cuts or they might as well throw in the towel now. I wonder if the corrupt UAW will even consider that or if they will just cease to exist on account of their greed and hunger for power.