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New G.M. CEO: Bankruptcy Is Back On The Table

by @ 3:50 pm on March 31, 2009. Filed under Auto Industry, Business, Economics, Politics

The new CEO of General Motors made it clear in his first public remarks that the company very well could find itself in Bankruptcy Court

DETROIT — The new chief executive of General Motors, Frederick A. Henderson, said Tuesday that bankruptcy was “more probable” than ever for the automaker but that he still hoped to successfully restructure the company out of court.

“We will get the job done,” Mr. Henderson, who is known as Fritz, said in his first news conference since succeeding Rick Wagoner, who resigned at the request of the Obama administration over the weekend.

“We will either do it out of court or we will do it in court,” Mr. Henderson said, “but we will get the job done in terms of recreating and reinventing General Motors as a competitive enterprise, one that wins in the marketplace.”

The administration on Monday rejected the turnaround plans submitted by G.M. and Chrysler, which have borrowed $17.4 billion since December to help them avoid bankruptcy. G.M. now has 60 more days to develop a new plan, and Chrysler was given 30 days to form an alliance with the Italian automaker Fiat.

If either automaker fails to meet the new deadlines, it could be forced into filing for bankruptcy protection, an outcome each has said that they hope to avoid. Mr. Henderson said he thought G.M. could accomplish what it needed to, including concessionary deals with the United Automobile Workers and bondholders who hold about $28 billion of its debt, within the government’s timeframe.

“If it’s going to get done out of court, we can get done in 60 days,” he said. “More time isn’t going to help the process.”

Henderson repeats these comments in an interview to air tonight on NBC:

General Motors’s new chief executive told CNBC that filing for Bankruptcy may be the best option for the struggling automaker.

In a taped interview to be aired tonight on NBC Nightly News, Fritz Henderson said that because of greater demands from the Obama administration to restructure, GM is considering the bankruptcy option. The auto giant previously had ruled out such a move, saying it would discourage people from buying GM cars.

If, at the end of all of this, we find ourselves 60 days from now with a General Motors bankruptcy, I think the question we can all ask ourselves is why did we waste billions of dollars trying to save this company from the inevitable ?

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