Tag Archives: What if GM fails
Catastrophic Chain Reaction that will eliminate around 3 million jobs.
– Government will loose around $150 Billion in revenue
– Part Makers will Shut down and will be out of business.
– Sales would plummet as consumers will loose interest
– Rental car companies, purchasers of about 15% of GM’s volume, would get nervous, too. They often sell their used models back to the auto maker. They’re worried they would have to liquidate the cars themselves if GM went bankrupt, says Maryann N. Keller, a longtime GM watcher who sits on the board of Dollar Thrifty Automotive Group Inc.
– If GM went belly-up, retirees, workers, could all take a hit
– GM’s creditors would also stand to suffer. The company has $31 billion in long-term debt, most of it due in 2023 and beyond.
GM and Ford reported they spent a combined $14.6 billion more than they took in last quarter. GM said it could run out of money by the end of the year. Ford said it could last through 2009, but only because it arranged a hefty credit line last year.Next week, Congress plans to consider giving the auto industry part of the $700 billion Wall Street bailout during a lame-duck session.
On the other hand “Bankruptcy could do great things for GM,” says William J. Rochelle III, a bankruptcy attorney with Fulbright & Jaworski LLP. But, of course, Chapter 11 is no sure bet. History is full of examples of companies that have emerged from bankruptcy simply to return in a few years.
As airlines and steelmakers have done, GM could use Chapter 11 to rewrite union contracts, potentially enabling it to slash retiree benefits and close plants without having to pay furloughed workers. The auto maker could even dump tarnished brands and get bankruptcy court protection from dealer lawsuits.