White House Says Managed Bankruptcy Now An Option For General Motors (GM) and Chrysler LLC

For the first time, the Bush administration said that arranging a managed bankruptcy was one of the options on the table as part of aiding General Motors Corp. (NYSE: GM) and Chrysler LLC.

However, the White House has said it's trying to avoid a "disorderly" collapse of the industry after the Senate failed to approve a $14-billion rescue plan. That plan would have forced the automakers into bankruptcy if they failed to make progress on turnaround plans by March 31st.

White House spokeswoman Dana Perino said, "There’s an orderly way to do bankruptcy that produces a soft landing. That’s one of the options."

Perino did not provide a timeline on the administration's decision, saying only that a call was "very close." Perino did say that bankruptcy was part of a "spectrum of options" that the administration was considering.

GM and Chrysler executives have told lawmakers that any form of bankruptcy could lead to failure at many suppliers and other companies associated with the auto industry, as buyers would likely not buy from a bankrupt company.

GM and Chrysler have said they need at least $8 billion by the end of December to avoid bankruptcy and at least $14 billion to get through the first quarter.

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General Motors Corporation (GM) is engaged in the worldwide development, production and marketing of cars.
Ford Motor Company (Ford) is a producer of cars and trucks.

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