Its editorial “A better option for auto industry” of Nov. 18 opines: “There is an alternative for the automakers, but it’s not found in the halls of congress: reorganization under Chapter 11 of the bankruptcy code.”
WATCHDOG: We couldn’t agree more!
We are sickened by lobbyists and legislators touting for the automakers by exclaiming that bankruptcy would bring an end to the US auto industry. Nothing could be further from the truth.
The manufacturers would continue operations as though nothing happened, their credit now restored since new obligations would have precedence over old debts. And under court supervision, fair significant debt reduction would be worked out through stockholders, creditors, executives and pension funds sharing the pain.
Also auto makers’ plans for re-organization would call for new, more competent management.
As for spare parts, so long as there is a demand, others will supply them, as they do already.
(Added on Nov. 19) For an excellent analysis of the benefits for the auto industry of Chapter 11 bankruptcy, visit the New York Times editorial here .
