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Steve Chiotakis: Today in New York, General Motors is unveiling a new mid-sized crossover at the international auto show there. Of course the reality is, who’s gonna buy a vehicle from a company that could go bankrupt? Word from Detroit is that GM is preparing to take advantage of a section of the bankruptcy code. One that would allow it to keep the most valuable parts of its business intact. Here’s Marketplace’s Jeremy Hobson.
Jeremy Hobson: It’s called Section 363, and it would allow the company to sell its top performing assets and brands to a new GM right away. That’s seen as a better option than breaking the company up and selling it in pieces.
Kenneth Klee is a bankruptcy law professor at UCLA. He says imagine your apartment building is filing for bankruptcy:
Kenneth Klee Now you could take apart the bricks and mortar and the pipes and sell all those off at auction. Or you could take the apartment building and sell it as a building. It’s worth a lot more as a building than it is as bricks and mortar and pipes.
The new GM building would include the most viable parts of the company — brands like Cadillac and Chevy — while leaving strugglers like Pontiac and Saturn behind.
Stephen Gross is co-chair of McDonald Hopkins Automotive Practice Group. He says a 363 sale makes sense for GM, given the pressure to get in and out of bankruptcy fast.
Stephen Gross: The key problem that you have with a company this big is it can’t move quickly. This will at least allow it to move faster.
The only other option, he says, would be a prepackaged bankruptcy — but that would require concessions from unions and bondholders. Concessions that have not been forthcoming.
In New York, I’m Jeremy Hobson for Marketplace.
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