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Bankruptcy Would Be Tough Call For Automakers
Unlike some auto-parts companies, it’s not clear that a filing would benefit the automakers’ dealings with the United Auto Workers.
July 14, 2008
As US automakers continue to struggle under the weight of a softening economy, higher fuel prices and unpopular products, the prospects of a ride into Chapter 11 would seem more likely. But such a development might carry greater risk for the carmakers than for companies in other industries, according to some.
"It's clear that the risks and challenges are much greater than the benefits of filing," said Gregg Lemos Stein of Standard & Poor's, speaking to the Detroit News.
The News said the greatest risk to an automaker filing would be public perception; it would be tough to sell someone on the idea of buying a car from a company that might be a shell of itself a few years down the road. And, unlike the case with some auto-parts companies, it’s not clear that a filing would benefit the automakers’ dealings with the United Auto Workers. Finally, the new bankruptcy laws would make it much more difficult for the car companies to control the outcome of the Chapter 11 filing.
To read the full story from the Detroit News, click here.
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