After the Storm: Bankruptcy and Credit in the Wake of Chrysler and Gm
Business Credit › Vol. 111 Nbr. 7, July 2009
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Summary
As the economy fell further into disrepair and officials from the "Big Three" automakers made increasingly frequent visits to Capitol Hill with their hats out, the forecast for the country's car business became all too clear. After months of discussion, criticism, government funding and management posturing, two of America's automotive titans, Chrysler LLC and General Motors Corp (GM), filed for protection under Chapter 11 of the US Bankruptcy Code in late April and early June, respectively. The manner in which Chrysler was sold fell in line with a current trend in bankruptcy where, rather than liquidating or reorganizing, much, if not all, of the debtor's business is sold under Section 363 of the Code, which permits filers to sell assets in a smoother fashion than what's normally possible outside of bankruptcy. In the case of Chrysler and GM, government intervention yielded positive results for unsecured trade creditors, and also for the labor union as well.
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Extract
After the Storm: Bankruptcy and Credit in the Wake of Chrysler and Gm
As the economy fell further into disrepair and officials m the "Big Three" automakers made increasingly equent visits to Capitol Hill with their hats out, the forecast for the country's car business became all too clear. After months of discussion, criticism, government funding and management posturing, two of America's automotive titans, Chrysler LLC and General Motors Corp. (GM), filed for protection under Chapter 11 of the U.S. Bankruptcy Code in late April and early June, respectively.
The reasons for either company's lamentable fiduciary position are well known now: overwhelming union obligations, inferior products, management that was resistant, if ...See the full content of this document
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