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On Sat, 06 Dec 2008 08:42:35 -0500, Eisboch wrote:


The fairest and most efficient means to save the auto industry is
through a government (taxpayer) supported, pre-packaged Chapter 11
filing. They don't go immediately out of business. Current workers
continue working. But, a federal judge will arbitrate new contracts,
vendor payments, and the negotiations required to accomplish these.
Government (taxpayer) financial support can be given subject to specific
uses for the money, as overseen by the bankrupcy court.

It works.

I'm not sure bankruptcy court would work in this case. Bankruptcy court
is good for getting people to do the same things, only cheaper.
Detroit's supply chain, is already working on very thin margins, as
evidenced by the number of in-bankruptcy companies, e.g., Delphi. It
seems to me, a more innovative approach is needed for long term
viability. Bankruptcy courts are not known for being innovative. I tend
to prefer Frank's bill.

http://www.house.gov/apps/list/press...ss111708.shtml



A Chapter 11 filing does not, in itself, reorganize a company and certainly
is *not* a means for "getting people to do the same things, only cheaper".
All it does is protects the company from involuntary bankrupcy by putting
the vendor bill collectors, banks and lawsuits at bay while an effort is
made to reorganize and satisfy current finanical obligations via
negotiation. While protected in Chapter 11 a plan is developed to
reorganize, refinance, and re-negotiate existing (and in GM's case -
obsolete) contracts. Overseen by a bankruptcy court, the plan, agreed to
by all concerned parties is generated and when implimentated, the company
emerges from Chapter 11. If a plan cannot be produced that is approved by
all concerned parties, the company usually goes belly up in Chapter 7.

Barney Frank's bill limits the ability to truly reorganize the auto
companies. It's simply throwing money into the same sink hole. Six-eight
months from now they'll be back, needing more survival money.

The auto industry's contracts and historical ways of doing business need a
complete overhauling in order to be a viable, competitive entity in today's
global markets. Chapter 11 reorganization, prepackaged with a government
bridge loan to keep the beast breathing during the process, makes sense to
me.

Eisboch