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Mortgage Forgiveness Debt Relief Act of 2007 Extended
Company wants government loans, says Chapter 11 would scare off buyers
By Tom Krisher
Associated Press
Published on Sunday, Nov 23, 2008
DETROIT: General Motors Corp.'s board of directors does not consider bankruptcy protection a viable option to solve the company's financial troubles, but it has discussed Chapter 11 because it has a legal duty to do so, a spokesman said Saturday.
Century-old GM, an icon of American manufacturing, has been battered by a plunge in car sales as American consumers tighten their belts and shift away from the big moneymaking pickup trucks and SUVS that have long been the staples of GM's lineup.
GM, which has slashed jobs and closed plants since early in the decade, has warned that it could run low on cash by the end of the year unless it gets a taxpayer-funded rescue from the government.
''The board has a responsibility to keep all options open considering the circumstances,'' said Vice President of Communications Tony Cervone. ''Chapter 11 protection is not a viable option because it doesn't fundamentally address the issues at hand today.''
The board, which has been meeting regularly by teleconference since the company's finances worsened, agrees with Chairman and Chief Executive Rick Wagoner that bankruptcy would be disastrous for the company, Cervone said. Wagoner has said it would scare away customers who would not make a big-ticket purchase from an automaker that is under court protection.
Instead, Cervone said the board supports Wagoner's strategy to seek congressional approval of low-interest government loans, getting the company through its liquidity problems until the U.S. auto market recovers and it can be profitable again, Cervone said.
''The board continues to support management and has continued to express support for management,'' Cervone said.
But industry analysts say the board has to prepare for bankruptcy if the government doesn't come through with loans in time, and, even with a loan, if the auto market in the United States doesn't recover in the next year or so.
DETROIT: General Motors Corp.'s board of directors does not consider bankruptcy protection a viable option to solve the company's financial troubles, but it has discussed Chapter 11 because it has a legal duty to do so, a spokesman said Saturday.
Get the full article here.
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Posted 08:11 AM, 11/23/2008
What you want and what you don't want is the only options you have. But, it is obvious there won't be government funding and just talking bankruptcy has spoiled the market.