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Auto Bailout vs. Bankruptcy

Here's the problem with bankruptcy: according to the best numbers I can find, legal and related fees for the UAL bankruptcy were approximately $300 million. Fees in the Enron bankruptcy were about $700 million. Fees for GM would certainly be in the billions. Unimaginable number of certified classes: sr. secured lenders, jr. secured, participants in revolver, unsecured, retirees, trade credit, dealers, spun-out parts manufacturers, each with lawyers and accountants.

So, those billions to legal fees have nothing to do with building better cars, becoming more efficient, funding retiree pensions and the like.

But the bailout option isn't much better. The unions will reluctantly play ball, dealer base will shrink and more managers will lose their jobs. But, what motivation do the retirees have to go along with anything? The only solution I see is for them to go back to work - but only get paid their pension benefit. And work might be washing cars in dealer lots...

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