The evidence is mounting that General Motors probably can’t escape the fate of an eventual Chapter 11:
Dec. 12 (Bloomberg) — For General Motors Corp., the question is no longer whether it will get a government loan or if Chief Executive Officer Rick Wagoner will be replaced. It’s whether anything can prevent the largest U.S. automaker from sliding into bankruptcy.
Even an offer by the Treasury Department today to provide temporary relief, after the Senate rejected a bailout plan approved by the House, isn’t likely to offset the Dec. 10 announcement that GM’s 49 percent-owned affiliate, GMAC LLC, lacked the capital to become a bank holding company. That means the financing unit won’t be able to access Treasury’s Troubled Asset Relief Program to help make auto loans.
GMAC may now have to file for Chapter 11 protection, with or without a loan, joining GM’s biggest parts supplier, Delphi Corp., which is already in bankruptcy. The Detroit-based automaker, leaking $67 million a day — enough to buy a fleet of 1,800 Cadillac CTS coupes — may soon be sucked into the vortex.
“GM already is bankrupt and should file for bankruptcy,” said David Littman, senior economist for the Mackinac Center for Public Policy, a policy research organization in Midland, Michigan. “They have too much overhead and too little time left to reduce size to be a survivor in this industry.”
So basically, we’ve given them a bridge loan for three months after which they’ll be in the same position they are today, if not worse off.
Again, thank you Mr. President.