Could GM be next for bankruptcy?

Jeremy Hobson May 1, 2009
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Could GM be next for bankruptcy?

Jeremy Hobson May 1, 2009
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Bill Radke: This morning in New York, a bankruptcy judge will begin hearing
the case of Chrysler. The carmaker filed for Chapter 11 yesterday. The White House wants a quick, surgical procedure, but a group of Chrysler’s lenders says it will object to the government’s plan for erasing the company’s debt. Marketplace’s Jeremy Hobson reports General Motors is watching all of this and might be seeing its future.


Jeremy Hobson: GM is dealing with the same kinds of problems Chrysler was, though on a much larger scale — getting bond holders to forgive debt in exchange for stock.

Larry Chlebina, the manager of a fund that owns GM bonds, says the message of Chrysler’s move is this: the specter of bankruptcy isn’t just a bargaining ploy.

Larry Chlebina: There’s no doubt the threat is real. The outcome could be the same, and that if you don’t want that outcome you better negotiate and come to a deal.

Joseph Phillippi of Auto-Trends Consulting says Chrysler’s bankruptcy is also a trial-run to see how its nationwide network of dealers and suppliers holds up.

Joseph Phillippi: That could very well result in an appreciable number of suppliers and/or ancillary businesses in these factory towns going out of business.

And remember — many of those same suppliers provide parts for GM cars, so the effects could be felt even if there’s no GM bankruptcy filing.

In New York, I’m Jeremy Hobson for Marketplace.

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