Senator Corker of Tennessee has proposed an interesting challenge for GM, which he stated in open session yesterday. He’d like General Motors to agree to a strict set of cost-cutting measures before the end of the first quarter of 2009. If GM fail to meet the objectives, they agree upfront to go bankrupt at the end of March. (The industry is, reasonably, dead-set against a bankruptcy because of the permanent damage to their brands and market position.)
What this means is that GM will need to extract a large set of painful concessions from a diverse set of stakeholders, including their bondholders, suppliers, dealers and workers, who will have no incentive to play ball. Many of those people would in effect be negotiating their own bankruptcies or job losses.
Read all of one of the best columns I have read on the Big Three bailout, which echoes much of our own Dave Hinz’s pieces on the subject.
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