Published on Saturday, May 30, 2009 by CommonDreams.org
Letter to President Obama
by Ralph Nader
The hour is late. You seem bent on an orchestrated bankruptcy for
General Motors on June 1, 2009. Before any irreversible moves are
made-- the GM/task force reorganization plan should be submitted to
Congress for deliberative review and decision. There are several major
concerns with a precipitous bankruptcy declaration that have emerged
over the last several days.
First, the previously understood rationale for bankruptcy-namely
obstinate bondholders--no longer applies. Recent developments indicate
that GM and the auto task force have revised the proposed allocation
of equity in a restructured GM, and reached agreement with at least
the most prominent bondholders. Although a June 1 bond payment is due,
it certainly seems that that payment could easily be wrapped into the
new bondholder offer, as effectively will be the case if GM enters
bankruptcy.
With the bondholder problem moving toward resolution, or at least now
clearly resolvable, there is no evident rationale for bankruptcy other
than an unstoppable momentum of some hidden agendas. Given the high
stakes, including job losses, communities devastated, the effects on
consumer confidence in the GM brand and the socio-economic impacts of
potentially excessive downsizing, a last chance to avoid the tyranny
against the weak that is a Chapter 11 bankruptcy court.
Second, the matter of how GM's holdings in China will be treated in
bankruptcy continues to demand attention before any filing. Kevin
Wale, President and Managing Director of GM China, told CNN that "Our
business is run as separate joint-ventures here in China in
partnership with SAIC ... so we're profitable, we fund our own
investment and we would be largely independent of any action that took
place in the US." Yet the GM assets and profits in China must be
included in any bankruptcy proceeding, and available to creditors,
claimants and litigants who could, conceivably, petition to take the
company into Chapter 7 liquidation.
Has GM clearly presented to the government its valuable holdings,
large profits and contractual obligations in China as part of its
assets in any bankruptcy? The task force has indicated some
uncertainty about these questions.
Third, proceedings in the Chrysler bankruptcy have highlighted the
manifold injustice being perpetrated on victims of defective Chrysler
products -- and likely also to be perpetrated on victims of GM
products. In the Chrysler proceeding, top Chrysler officials have
acknowledged that they were ready and able to do a deal with Fiat that
established successor liability for the emergent Fiat/"good Chrysler"
company. In the course of bankruptcy or in preparing for bankruptcy,
however, they reversed course, apparently just because they could.
Now, hundreds of Chrysler victims are on track to have their claims
extinguished, unless the bankruptcy judge or other court overrules
this element of the bankruptcy plan.
There are many differences between the bankruptcy of the private
company, Chrysler and the pending GM bankruptcy, but the GM
restructuring plan is similar to Chrysler in the anticipated creation
of a bad/old GM and a new/good GM that emerges without liabilities.
Does the government as the major owner of GM plan to follow the
Chrysler approach? Has President Obama and his Task Force given
consideration to the suffering of real adults and children that will
follow from such a move?
Not to mention the political backlash.
One such real person is Amanda Dinnigan, a 10-year-old girl from Long
Island, New York. Amanda was injured by an allegedly faulty seatbelt
in a GMC Envoy that snapped her neck in a crash. Her father, an
ironworker, estimates her healthcare costs at $500,000 a year. Her
lost quality of life will obviously be tragic. Will a discretionary
decision not to establish successorship liability in a discretionary
(voluntary) bankruptcy leave Amanda and her family -- and thousands of
others like them with no access to justice?
If the Obama officials intend to proceed with maneuvers effectively to
extinguish their claims, they should at least talk to some of them
first, and confront the human consequences of such actions.
The GM/task force bankruptcy plans appear geared to saving the General
Motors entity -- but at a harsh and often avoidable cost to workers,
communities, suppliers, consumers, dealers, and the nation's auto
manufacturing capacity which will move faster, post bankruptcy, to
China.
At this late stage we again urge President Obama to reconsider the
bankruptcy filing plans, and to enable deliberative and meaningful
Congressional review -- as many Members of Congress are seeking -- of
the restructuring plans before irreversible steps are taken.
After all, Congress is more than a potted plant. The "first branch"
legislated, after public hearings, the 1979 Chrysler bailout and the
complex Conrail restructuring a few years later.
_______________________________________________
pen-l mailing list
[email protected]
https://lists.csuchico.edu/mailman/listinfo/pen-l
