NEW YORK (CNNMoney.com) -- It worked for the airlines, but it might not work for General Motors. Saving the company through bankruptcy is probably not a viable option for the troubled automaker.
The reasons go deeper than the belief that consumers would shun a vehicle being sold by a bankrupt automaker. Some leading experts said that GM would find it exceedingly difficult to raise the billions in financing it would need to stay in business during a bankruptcy reorganization.
The bottom line: Unlike the experience of United, Delta and Northwest airlines, a GM (GM, Fortune 500) bankruptcy could spell a quick end to the company's operations.
The question of whether GM can survive is crucial to the growing debate in Washington over whether the government should put up $25 billion or more to bail out automakers.
GM on Friday, while saying it was working to avoid a catastrophic bankruptcy, disclosed that it has almost run out of cash and said it needs federal assistance before the end of the year. President Bush, who will be in office until Jan. 20, remains wary of a bailout.
Bailout advocates, including President-elect Barack Obama and the Democratic leaders of the House and Senate, argue that the collapse of a major automaker would be too great a shock for an already struggling U.S. economy to absorb. It is estimated that a GM bankruptcy alone would cascade widely throughout the economy and cost as many as 2.5 million jobs.
Some critics of a bailout have suggested that the automakers would be better off filing for bankruptcy to to get out of obligations and contracts they can't afford and become competitive again without putting taxpayer dollars at risk.
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The reasons go deeper than the belief that consumers would shun a vehicle being sold by a bankrupt automaker. Some leading experts said that GM would find it exceedingly difficult to raise the billions in financing it would need to stay in business during a bankruptcy reorganization.
The bottom line: Unlike the experience of United, Delta and Northwest airlines, a GM (GM, Fortune 500) bankruptcy could spell a quick end to the company's operations.
The question of whether GM can survive is crucial to the growing debate in Washington over whether the government should put up $25 billion or more to bail out automakers.
GM on Friday, while saying it was working to avoid a catastrophic bankruptcy, disclosed that it has almost run out of cash and said it needs federal assistance before the end of the year. President Bush, who will be in office until Jan. 20, remains wary of a bailout.
Bailout advocates, including President-elect Barack Obama and the Democratic leaders of the House and Senate, argue that the collapse of a major automaker would be too great a shock for an already struggling U.S. economy to absorb. It is estimated that a GM bankruptcy alone would cascade widely throughout the economy and cost as many as 2.5 million jobs.
Some critics of a bailout have suggested that the automakers would be better off filing for bankruptcy to to get out of obligations and contracts they can't afford and become competitive again without putting taxpayer dollars at risk.
CNNMoney.com's Article
AutoNation's Video Link