Bailout with a price: Chapter 11 bankruptcy
By JIM KUHNHENN
Associated Press
November 20, 2008
Page 2 of 2
When Dodd asked United Auto Workers President Ron Gettelfinger this week whether prepackaged bankruptcy backed up with federal guarantees was any more palatable, Gettelfinger cited risks to pensions and to retirees who could lose health benefits and are not yet eligible for Medicare.
What's more, auto executives argued that the stigma of bankruptcy would drive customers away, eliminating a Chapter 11 company's share of the market.
With an auto bailout dead for now, the bankruptcy debate is likely to rear up again next year.
President-elect Barack Obama had urged the Bush administration and Congress to find a way to help General Motors Corp., Chrysler LLC and the Ford Motor Co. In an interview with CBS' "60 Minutes" that aired Sunday, he indicated that bankruptcy may not be the answer.
"What we have to do is to recognize that these are extraordinary circumstances," he said. "Banks aren't lending as it is. They're not even lending to businesses that are doing well, much less businesses that are doing poorly. And in that circumstance, the usual options may not be available."
Robert Reich, who was Labor Secretary under President Bill Clinton and is now on Obama's board of economic advisers, has suggested that a company receiving federal aid at least pay a price similar to Chapter 11.
"In exchange for government aid," he wrote in his blog last week, "the Big Three's creditors, shareholders and executives should be required to accept losses as large as they'd endure under Chapter 11, and the UAW should agree to some across-the-board wage and benefit cuts."
------
Associated Press writer John Dunbar contributed to this report.
>> Back -- Page 1 2
Copyright 2008 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
++ Discuss this topic in The Forum
Current rating:  4.5 out of 5.0 (19 total votes)
| 
