Update: Team Obama says it’s not true.
Original post: This is the new, trendy idea being bandied about. It’s not and out-and-out bailout for the autos, and it’s not a let ’em fail approach. And according to Bloomberg, it’s being considered by Obama’s transition team:
In a prepackaged bankruptcy, an automaker would go into court with financing in hand after reaching agreement with lenders, workers and suppliers on what each would give up and on the business plan to be followed. The process might take six to 12 months, compared with two to five years if the automakers followed an ordinary Chapter 11 proceeding and worked out agreements under a judge’s supervision, Bane said.
Automakers would have to depend on government financing to restructure in bankruptcy court and probably couldn’t attract private loans until they were ready to emerge from the process, Bane said.
The auto heads told Congress that this idea wouldn’t work, but they’ve also said that they’ve never even considered bankruptcy, which we know is an impossibility. Until they’re convinced that no pre-bankruptcy bailout is possible, they’ll insist that there’s no other option.
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