Serious question on the auto bailout.

I have not been following this as closely as most issues ~~ have been HORRIBLY ill with that flu/cold that is going around ~~ but have listened a bit and would like some in-put:

From what I have heard, the Detroit 3 need major financial reorganization. That is what the money from the govt is suppose to aid with. What is the difference if they do declare bankruptcy and seek protection from creditors and reorganize under the bankruptcy laws?

That would mean that the taxpayers would save a ton of money that could be used elsewhere and, further, it would also stop the bullshit from the GOP stonewalling and calling for the basic destruction of the UAW as part of the bargain to get their vote for the auto industry.

I have heard the thought that people will not buy autos from a bankrupted company ~~ but if they on the verge of bankruptcy and need the bailout, I cannot see that much difference between the two financial positions.

I am totally pro-Union and it bugs the shit out of me that the UAW members somehow have become the target for the financial woes of the Detroit 3 ~~ IMO, that is total bullshit.

So, some help please: Why would bankruptcy reorganization be so bad? And would a bankruptcy reorganization help to protect the UAW members?

TIA for any responses...:hi:

Along with pension issues. Bad for unions.

Correct me if I'm wrong about this, but that seems to be what happens every time an airline seeks bankruptcy protection

That is the main reason I posted this thread.

Is there some way the BK Court can re-organize unions that are associated with business which are in bankruptcy?

:shrug:

At least to GM. Cerebus / Chrysler is another story. Ford dropped out of the bailout program and is in not immediate danger of bankruptcy.

The reason GM may not be able to reorganize is that such a reorganization requires a lending institution to underwrite the paper. GM is in so much debt ($27 B I think) that there simply isn't an institution in the world right now with the capability to underwrite that much debt load.

As for consumers buying from an officially bankrupt corporation or not... I don't really know. I know how I would feel about it, and it does move the meter for me, personally, from "concerned" to "OMFG - they would have to make me such a deal!". I remember the earlier bailout of Chrysler and the decision by Lee Iacocca to sell only to fleet buyers (corporations, rental car companies, etc) until their new line of cars was ready to sell to the public. Fleet buyers are more willing than the general consumer to accept the risk that the company might go out of business permanently because they typically don't keep the cars more than 2 or 3 years. Well, back then that was the norm, might be different now.

As for what happens to the UAW if GM could, in fact, reorganize... well, that depends on the bankruptcy judge, but a number of things could be really bad. Contracts could be voided, for starters, pensions could be at risk, then there are the parts suppliers... and that could be really grim. Current and past due invoices could be canceled or renegotiated to pennies on the dollar, contracts could be canceled, etc. And worse, it might take months before the suppliers even know that they will get paid for any current or future work. Most likely, the day that GM files would the the day those parts suppliers announce layoffs of just about everyone (even if that never comes to pass, it would be a good strategy to be within the law and whatever contracts the suppliers have with their unions to announce as early as possible... and if the GM bankruptcy is smooth, then announce that they don't really need to lay off as many as was announced earlier). Anyway, it would be months of mess like this.

I really don't see GM getting to reorganize in bankruptcy at this point, so the more likely effect is termination of all of direct GM employees and the likely collapse of their parts suppliers, which will then affect all the other car companies as they all use the same set of sub assemblies. GM going down might mean the end of all domestic car manufacturing, even by the foreign companies like Toyota and Nissan. Bet the asshole repuke Senators don't even realize that yet. Well, I could be wrong, I'm sure that Nissan and Toyota executives are aware of this problem and have secondary plans in place just in case... but then the plan could be to simply move to a different continent where they still have their parts suppliers in place.

I had no clue that GM was that far in debt. And, IMO, if the workers are the ones to suffer because of the BK, then this is not a good idea.

What do you think of the govt just plain buying them out and running the company?

like dominoes. It would be a cascading default of contracts into other companies forcing them into bankruptcy too, costing 3 million jobs just to begin with. Then there are the ripples out from that.

and not just for the car companies.

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x4637267

binding.