Have you ever submitted a project and been told to try again? We writers at USDemocrazy sure have (apparently my editor felt “Why I HATE Broccoli” is not worthy of a newsblog like ours).
Chrysler and General Motors are now facing that sting. Their plans for restructuring their failling companies have been roundly rejected by the Obama administration for not going far enough to cut costs.
When we say rejected we really mean it. Rick Wagoner, the Chairman and CEO of GM, was asked (read: ordered) to step down by the White House (no fat bonuses available for this dude) .
This means that GM has 60 days and Chrysler 30 days to come up with new ideas. No new plans, no new money.
So if their plans were not good enough, what does Obama want?
One solution that has been thrown around is is to invoke the dreaded Chapter 11, better known as bankruptcy.
WHAT? BANKRUPTCY!?! Isn’t that what Washington is trying to avoid?
In fact, no. Bankruptcy does of course mean the company closes shop. But bankruptcy is also a powerful legal tool that allows companies to avoid many contractual obligations (such as pesky union agreements).The hope is while in a temporary state of bankrutcy the floundering company can reorganize and resurrect itself.
So why has Detroit avoided the B-word like the plague? Quite simply… Who wants to buy a car from a bankrupt company (a five year warranty means nothing if the Chrysler is gone in two)?
The White House has a solution. Obama supports a plan for federal funds to cover GM and Chrysler warranties in the events the companies should go under.
Let’s hope Detroit’s next plan makes the grade. Otherwise we’ll need to change Detroit’s nickname from Motown to No Town.
