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US Threatens Bankruptcy for GM, Chrysler; GM’s Wagoner Out

The Wall Street Journal offers an essential overview of the blockbuster news of the day, the Obama administration’s potential plans for GM and Chrysler. The government’s plan, a copy of which is available here, involves dividing the companies’ “good” and “bad” assets and sending the auto makers into bankruptcy to purge their biggest problems.

As a contingency of the bailout, the White House insisted on the immediate ouster of GM’s chairman and chief executive, Rich Wagoner, as well as most of its board over the next few months. As for Chrysler, the company would get no more help from the government unless it can finalize a proposed alliance with Fiat by April 30. Chrysler must also reduce its debt and health-care obligations.

From the Wall Street Journal article:

President Barack Obama on Monday warned GM and Chrysler that they couldn’t depend on unending taxpayer loans and gave the companies a brief window to craft plans — 60 days for GM and 30 for Chrysler — that would justify fresh government support. But he also pledged to do all he could to save the industry. “We cannot, we must not, and we will not let our auto industry simply vanish,” Mr. Obama said at the White House. The remarks came a day after the administration forced Mr. Wagoner’s departure and rejected the restructuring plans that GM and Chrysler had hoped would lead to another infusion of government loans. The administration also is set to remove the majority of GM’s board of directors. One senior administration official said the aim was to restart GM “with a clean sheet of paper.”
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Our blog, News from Notch Consulting, has been published continuously since November 2007 with free news and updates related to the tire, rubber, carbon black, silica, and rubber chemicals industries.

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