The ill-considered problem of a GM bankruptcy

If GM does a Chapter 11, they would need, as companies in bankruptcy often do, debtor-in-possession financing to get them through the reorg. Such debt is low risk because it comes before all other debt, but given how much GM would need and the frozen credit markets, it’s doubtful they could get it. And without, they probably can’t pay suppliers, who are also hurting badly.

Of course, a bailout could just prolong the process, rather than solving it.

One comment

  1. One of the big issues here is that the “big 3” were never asking for a hand out. They were asking for a loan. One that they would pay back. Unlike the banking industry, which is giving little to nothing back for trucks full of cash, they went in asking for a low interest loan. The media played it up as a hand out, but that’s not at all what they asked for.

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