Getting Corked

A bailout proposal from Tennessee Senator Bob Corker, who offered an outline of what should happen before any money is given to the Native American Auto Manufacturers.
• “One, give existing bondholders 30 cents on the dollar to help reduce their overall debt load. • “Two, bring wages immediately in-line with companies like Nissan and Volkswagen. • “Three, GM owes $23 billion to the United Auto Worker’s VEBA (voluntary employees’ beneficiary association) account. The union must agree to take half of that payment in GM stock. • “Four, the union must agree to do away with payments to workers who are still receiving almost full compensation up to four years after their jobs have ended.
GM CEO Wagoner is adamant about bankruptcy not being an option, but then he stepped into a trap
Second, an increasingly desperate GM does have "a Plan B," despite repeated claims by GM Chairman Rick Wagoner, GM's lead director, George Fisher, and President Fritz Henderson that Chapter 11 bankruptcy filing is not a "viable option" for the No. 1 automaker. Oh, but it could be, Sen. Bob Corker, R-Tenn., learned by pressing Wagoner. If GM, the United Auto Workers and the automaker's bondholders failed by March 31 to rework GM's labor costs and restructure its debt-laden balance sheet -- two core goals of many bankruptcies -- would Wagoner agree to pay the loans back in full (from what?) or file for bankruptcy? "Yes, I would," the GM CEO replied, with almost no hesitation. Bingo. Corker uses the specter of bankruptcy outside of bankruptcy to get a bankruptcy-like result -- a nice trick if the rest of Congress buys his logic (debatable) and if negotiations unspool as he envisions. Third, Chrysler almost certainly will not survive this shake-out and remain an independent automaker, a fact punctuated by the (not necessarily new) revelation that Chrysler's owner, Cerberus Capital Management LP, is not interested in pumping more money into the automaker; that Cerberus acquired Chrysler to access its captive finance company; that Cerberus is looking to foist Chrysler (or whatever assets it can) on a would-be partner.