Harlem dealership opens door for GM
Bankruptcy laws are pretty quirky. And because they are, here’s a little tidbit you might not know: A little dealership in Harlem, NY will forever be linked to GM’s bankruptcy filing this morning.
Before GM filed its historic bankruptcy on Monday, Chevrolet-Saturn of Harlem made its own Chapter 11 filing. The dealership’s move gave the automaker legal access to its preferred bankruptcy court in Manhattan.
Normally a Detroit-based company such as GM would file in Michigan or Delaware, where it is incorporated. The only way for it to file in New York would be through a subsidiary that did most of its business in New York or was incorporated in the state.
Court papers appear to describe a car dealer that sold significantly more corporate bonds than Camaros, running up $40 billion of debts and obligations to unions.
Like father, like son, I suppose. GM wanted to file in Manhattan because the court is seasoned in handling major cases, like the bankruptcies of Enron and WorldCom.
No matter how the actual bankruptcy plays out, the new GM is up against it. It’ll have to buck a history of largess and missteps and try to make money as a much smaller, much more focused company. Impossible task? No. Difficult, yes. And what makes it so difficult is the fact the government will own most of GM.
Today, President Obama promised to stay out of the way, but the New York Times points out:
Although the president said that, once the government sets up new management and a board it will remove itself from G.M.’s day-to-day operations, his aides anticipate intense pressure as the company’s managers are called to testify in Congress and face questions like why they decided to build new cars in Mexico and South Korea, rather than in Michigan or the South.
“Congress and many Americans are going to say, if we own it, why can’t we make these decisions?” one of Mr. Obama’s top economic aides said, “and it’s going to be a challenge to answer that.”
One of many challenges.
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