Originally Posted by midwinter
Let me get this straight: you think it is better to let the auto industry go into Chapter 11 and potentially hose a large sector of the market by simply refusing to pay monies owed (to workers, to suppliers, to dealers, to god knows who else)?
No - I really wish that you had read my original post that started this thread. You are putting words in my mouth without actually reading what I have posted many times over. This thread is like a tag team where I have the exact same argument with 20 people in a row, with no information transfer from one person to the next.
Chapter 11 -
stockholders get wiped, common and preferred both.
bondholders get converted to stockholders
union contracts are wiped
dealer contracts are wiped
accounts receivable and accounts payable stay with the company and are paid by the federally funded dip loan.
dip fund includes trust fund for warranted work on cars, to make sure people are not afraid to buy from GM.
No suppliers are harmed. Plenty of dealers are harmed, but they have to be, as GM has to shed 3000 dealerships to be competitive. The majority of the debt is in bonds, and once those are gone GM will have the cash flow to survive - no federal bailout needed (except for the dip loan, which is paid back before they exit chapter 11).
If Bush has half a brain, his "bailout" from the TARP will be this chapter 11 dip fund, and GM will go into chapter 11 in early January.