The main reasons why a fast bankruptcy is not possible is because of the way bankruptcy proceedings are designed to work. As a democratic process in essence, court supervised bankruptcy allows all parties involved (unions, dealers, suppliers, creditors and so on) to raise objections, thus preventing the process.
"They all have legal claims, and I don't see where the administration can 'force' them to abandon those claims. Why agree to something GM wants if you think the law is on your side and a bankruptcy judge might decide in your favor?" AutoPacific analyst Stephanie Brinley told the aforementioned source.
The first hints of one of the parties opposing bankruptcy filling emerged yesterday, together with the news that the US Treasury Department told GM to get ready for bankruptcy by June the 1st.
The bondholders are said to prepare legal arguments against GM's filling, according to the Wall Street Journal, because such a move might force them to accept big losses on their investments.
"Even the most senior creditors are being asked to take a very modest portion of the face value of their loans to help the huge car company get out of financial trouble," Douglas McIntyre 24/7 Wall Street analyst told the source.
In case objections are raised, a bankruptcy that will not be fast and surgical will not please the US Treasury Department. "That would make a bankruptcy less attractive to the treasury, which would simply like to get the GM matter resolved in a way that does the least to disrupt the industry, its suppliers, and its employees," McIntyre added.
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