Quote:
Originally Posted by EllwynX
I'll admit, I'm somewhat worried as well. Have there been factual reports on what will happen if GM declares bankruptcy? Not speculation on possibilities, but real concrete info on what happens. Will car production cease immediately? What happens to the people who go in for a warranty covered repair? Would upcoming products be put on hold indefinitely (ie- Camaro, Volt)?
We can say 'have faith' until we're blue in the face, but I personally would like to know what WILL happen if they file for bankruptcy...
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Nobody knows what WILL happen. That's why "bankruptcy is not an option." There are many things that could happen, ranging from a full recovery to an absolute annihilation.
Supposedly, (and this is according to Big Three), if GM files for Chapter 11 bankruptcy protection, there will not be enough money available to restructure to the extent the 'committee' seems to want (on the order of hundreds of billions). None of this money would be paid back, because they're not loans. They are out of pocket spending to reorganize a company and set it on its feet again. On top of that, recent studies suggest that 80% of people wouldn't even consider buying a car from a bankrupt company, essentially killing their sales and any chance at coming back. They will enter the proceedings and promptly be forced into a Chapter 7 liquidation process because there would be no hope of recovery....under Chapter 7, GM would get divided apart like a turkey on Thanksgiving, and all the technologies, patents, brands, plants, buildings will be sold off to the highest bidder...GM will cease to exist.
Then the suppliers will go under. Delphi will die, American Axle will most likely tank, and many, many, many others whose biggest customer (or one of the biggest) is GM. Upon this happening, Ford and Chrysler will be choked off from parts, and within short-order, they too will declare bankruptcy, be chopped up and sold off -- ending the American automotive Industry. UNLESS some private Investment company (who most likely knows nothing about the auto business) buys up, say, Chevrolet and all its assets. Then Chevrolet will continue on without the burden of the rest of GM...but that's unlikely (so we're being told).
Now...you've got 3 million people out of work within the first year, and 2 million more being laid off or fired the next year. The vast majority of these people will probably file for unemployment...and siphon even more money out of the government. On top of not working, these people won't be spending on anything other than bare necessities...further hurting out economy. Possibly to the point of a full-scale depression. But that may be overblown.
(^) That is a very real
risk with Chapter 11, and that's why they don't want to do it. Just like jumping off a cliff with no safety harness...it's an option. But why would you do it?
I'm afraid I don't have any links or articles...I've pulled that from various sources I've read and listened to over the past week or so.