The Key Question

"Suppose the deal announced today were the only possible pre-packaged bankruptcy, and your choice was to take it or allow GM to liquidate now. What would you do?"

Liquidate.


But read the whole (long) thing if you want to understand what was actually announced today.

Plus, this... as in "here we go again, just like the Chrysler deal, wrecking 150 years of bankruptcy law" (since one William C. Bullit set its foundation in law).

"The deal is unfair to unsecured creditors, because they get a worse deal than someone standing behind them in line (the UAW’s VEBA). It has nothing to do with who those parties are (labor vs. creditors). It is about the importance of maintaining a stable and predictable set of rules to govern the capital structure of a firm, and the value that stability creates for firms’ ability to raise capital. All these arguments boil down to the cardinal rule of waiting in line for the kindergarten bus: it’s not fair to cut in line. If that rule is broken too often, chaos ensues."

2 comments:

JP

8:57 AM

No link to an article?

Jake

9:21 AM

Sorry... link fixed.