Perhaps in his Little League days outside the Fisher Body plant, he took too many high hard ones in the head: anyway, the customarily lucid Daniel Gross has a curiously ambivalent post up about a big-auto bailout (link). He says the no-bailout folks are right. Then he says he dissents anyway. But then he says what he really means is that he is against a Chapter 11.
Huh? Gross picks up all the stuff about how Chapter 11 takes too long and costs too much money blah blah. It can, but it doesn't need to. The purpose(*) of Chapter 11 is to maximize asset value, including the preservation of going-concern value if, in fact, that is the road to maximization. You deliver the proceeds to the stakeholders as their interests may appear and if there isn't enough to go around, why then the people below the Plimsole line just go away empty handed.
Plenty of times, it works just that way. If it hasn't worked that way for the auto suppliers, it may be because everyone recognizes that the fate of the suppliers is tied up with the fate of the industry, and nobody wants to move too fast until they understand what will be the fate of the industry. My guess is that a Chapter 11 for the big three would speed up, not slow down, that process.
(*) Okay, okay, I admit it: as I have written myself more often than I care to remember, the "purpose" of Chapter 11 is a contested concept--there are lots of possible purposes, and they can be in conflict. But most of the horror stories about Chapter 11 as a great formless blob go back to the mid 80s: many companies have learned better since then, and in a great many cases, Chapter 11 has enhanced value.
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