It appears that Bankrupcy could be a very real possiblity for GM and Chrysler. According to Bloomberg, even as the big 3 go back to Washington to lobby for bailout funds, that they are considering working with the government on a "pre-arranged" bankruptcy plan.
Pre-arranged Bankruptcy PlanBloomberg Article
According to sources, this plan could go into place next week. From all indications, it appears that Execs at the big 3 know that they have a better chance at getting bailout funds from the government if they work on a pre-packaged bankruptcy.
General Motors Corp. and Chrysler LLC executives are considering accepting a pre-arranged bankruptcy as the last-resort price of getting a multibillion-dollar government bailout, said a person familiar with their internal discussions.
Auto executives have warned bankruptcy would lead to liquidation as customers abandoned the companies. Staff for three members of Congress have asked restructuring experts if a pre- arranged bankruptcy -- negotiated with workers, creditors and lenders -- could be used to reorganize the industry without liquidation, a person familiar with that matter said.
The markets global markets already seem to be responding to the news that GM and Chrysler could be considering banruptcy. US Stock futures are falling at this news.
Japan stocks fell on speculation U.S. carmakers will enter bankruptcy, reducing demand in the world’s biggest economy, and as companies cut investment at the fastest pace in six years to cope with the global recession.
Bridgestone Corp., the world’s No. 1 tiremaker, sank to a five-year low on a report General Motors Corp. and Chrysler LLC are considering a pre-arranged bankruptcy. Komatsu Ltd., the No. 2 maker of earthmovers, sank 7.5 percent after Japan’s capital spending plunged last quarter. Nippon Mining Holdings Inc. surged 11 percent after agreeing to merge with Nippon Oil Corp.
"Regardless of whether the U.S. automakers go bankrupt or stay afloat, they’ll have to sack workers," said Yoshinori Nagano, a senior strategist at Daiwa Asset Management Co., which manages about $96 billion in Tokyo. "Should the companies collapse, it may trigger a series of business failure and worsen an already weakened U.S. economy."
Markets react to Bankrupcy News
Despite what Executives have said in the past, it looks like Bankrupcy is in fact an option.