What happens to GM if they tell President Obama they will go to bankruptcy?

[colten]

Mr. Obama and the Treasury Sectary are walking a very thin line on the limits of what they are entitled to do. If they have not already stepped over that line.

The stockholders are the ones that choose who the Board will be NOT the President of the US.

This country is not a dictatorship. Even though the Whitehouse is trying to make it that way.

Slowly but surely more and more freedoms are being taken away with the government taking over private enterprise by coming in the back door with a smooth talking salesman who sales his rhetoric to the public..

Ford saw the hand writing on the wall and is moving manufacturing and assembly to South American to avoid a take over by the US government.

And people cry about outsourcing without looking at the reason why.

[cruz50]

If GM decides to go into bankruptcy, a bankruptcy judge will look for a buyer, and Obama will step in and buy it anyway, and fire their stupid asssses

[benon]

He looks like a bigger fool than he already does.

[breasal]

Obama didn't go to GM to ask for a bail out, GM came to the tax payer.

The problem with allowing a huge employer like GM to fail is that it is inhumane. Screw economic theory, the government's job is to protect the well being of it's citizens.

Your problem is that you do not understand the magnitude of wealth created by the auto industry. Even if your employer isn't directly involved in manufacturing, it will be indirectly affected by it.

Pulling that much money out of our economy will impact every one.

Is is possible that GM could reorganize and survive and every thing be ok? Yes, it's possible, but not probable. The consequences of their failure are so dire that it is irresponsible to take that chance.

The majority of Americans aren't willing to take this gamble, so we are going the way we are going. Deal with it.

[chen12]

Who would buy a car from a bankrupt automaker?

While bankruptcy and reorganization would be the normal and helpful route for companies like GM, it will also be there death sentence. They can count on decreasing sales and no profit if they declare bankruptcy. No one would buy their cars, people would fear that if GM goes under they won't be able to get parts, or factory warranties, or things like that.

My guess would be that the government wouldn't let it happen. They would announce a temporary takeover.

[aldric13]

There is a wide wide difference between doing what's best for the country and what's best for your presidency. Anyone who cannot ( or will not ) see the difference is a fool who enjoys being a robot.

[golding]

What happens?

The government (well, Federal Bankruptcy courts) hire a firm to go into the company headquarters and they fire all of the execs right away. The next thing they do is secure all of the properties, and the only ones allowed in or out are authorized personnel. They will assess all of the profit margins of various aspects, and close and sell off the areas that are not profitable and actually too costly to continue to operate. They will sell this stuff off, and pay the creditors with that money. They will continue to operate the aspects of the company that are profitable, and these individuals will continue to pay ONLY necessary personnel for operation, and continue to pay off creditors. They will do this within a specified amount of time as dictated by the federal bankruptcy courts. After that period of time, if they are not operating at some sort of profit that would dictate continuation of the company, then they will decide to close the company, sell off all remaining items and pay whatever is left from the sale to the investors (if anything. . .). But the creditors are the ones that get paid first. Investing is much riskier than they lead you to believe.

[norwyn]

The government is providing loans to GM and Chrysler at their request because they realize, unlike the uninformed and rabid haters on this site, that the bankruptcy of GM and Chrysler would take down thousands of companies from parts suppliers and the firms that supply them to auto dealers, etc. The ripple effects of the bankruptcies of these two firms would be huge and the loss of jobs and manufacturing capacity in our economy at this time would be exactly the wrong thing for the nation.

If GM and/or Chrysler don't like the terms of the loans, they could of course refuse them and file bankruptcy instead. If they file for Chapter 11 protection they will be reorganized and will still operate to at least some extent. But, their suppliers' receivables will not be paid immediately (although new orders will be paid.) Parts suppliers have said that if GM or Chrysler file for bankruptcy that they will in turn have to do the same.

However, they have instead asked for loans and are setting about complying with the conditions for the loans.