REPORT: MI attorney general pleads for automakers to declare bankruptcy in state
As in a basketball game when players are yanking on jerseys trying to block each other out under the basket, General Motors and Chrysler's creditors have officially begun jockeying for position. Michigan's Attorney General, Mike Cox, has sent letters to the CEOs at both companies to ask that, if they file for bankruptcy, they do it in Michigan. Why? Because that would be more convenient to the creditors that GM and Chrysler have in Michigan.
According to The Detroit Free Press, both automakers owe funds to state coffers from the Michigan Business and Single Business Tax obligations to environmental regulations, among others. If GM and Chrysler declare bankruptcy in some other state, the burden will be on state reps to travel to attend proceedings, and that "would undoubtedly lead to unjust bills." What remains to be seen, though, is how much say either GM or Chrysler will have in where they will have to declare bankruptcy – if such movements become necessary.
[Source: Detroit Free Press]
Reader Comments (Page 1 of 1)
KeatMP 5:59PM (4/23/2009)
I think such moves are necessary. They both need to re-organize.
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jojpopjpjpj 6:07PM (4/23/2009)
Lord Obama shall decide. Only he has the wisdom to make such a decision.
How dare you question the dark side!!!
And, on the 6th day, he took over the auto industry.
If anyone doubts his socialist plans, read this:
http://thehill.com/dick-morris/obamas-leap-to-socialism-2009-04-21.html
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Sean 6:16PM (4/23/2009)
Sorry, I can't read anything on that site, I left my tinfoil hat at work.
Aprime 6:31PM (4/23/2009)
I'd check the author's credentials before saying anything about tinfoils if I were you.
The threat of socialism is very real, and has been existing since the enactment of the pledge of allegiance.
You're suppose to be a union of colonies working together for their own goal, a republic. Yet, in the pledge it says the union is indivisible. What made joining the United States compelling was its divisability - so that if the union wasn't working for one of the states, it could cecede without problem.
The only reason you're having economic problems of this magnitude is because of the federal government's heavy involvement into the economy. Asking an arsonist to estinguish the fire he set up sounds pretty retarded to me.
Chris 1:16PM (4/24/2009)
I forgot my tinfoil hat, too. Sad day.
Mez Jr 2:01PM (4/24/2009)
I like how "Socialism" has become the new "Liberal" which was the new "Communist".
laughing boy 6:11PM (4/23/2009)
Excuse me while I play my very tiny violin.
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MajorGeek 6:31PM (4/23/2009)
Keatmp has it right, many people think bankruptcy means they are out of business. They are in such bad shape that bankruptcy could work for them to reorganize. Question is, what does the government get back from their "loans" if they do?
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BigWill 6:45PM (4/23/2009)
Chrysler & GM would be nuts to file in Michigan. Cirque du UAW will stage a complete spectacle daily outside the courthouse.
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bh 6:54PM (4/23/2009)
Sure, us taxpayers give GM billions, the top brass puts it in theirs pockets and runs away.
Burn Detroit burn.
Frank Hoffman 7:04PM (4/23/2009)
This is great. Instead of the car companies just going bankrupt, we get to pay them billions of dollars and then let them go bankrupt. I have to commend the government on that move.
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Samurai Jack 7:18PM (4/23/2009)
Um, don't you think the government will be first in line among creditors during the bankruptcy proceedings? If they're not it's only because they choose not to be, perhaps so that they can avoid taking down some of GM's and Chrysler's suppliers.
BoxerFanatic 1:21AM (4/24/2009)
No, the government will not be standing in line for credit repayment.
They will be converting to equity, as they are trying to with the banks that took TARP. They don't care about oversight of TARP money, because it will become common stock anyway, and then they'll hold a significant minority, or even majority stake in those private institutions. (publicly traded is not the same as public in terms of government... although it is becoming synonymous.)
They will come out of bankruptcy as Government Motors, moreso than they already are.
Pertaining to previous comments above,
And while someone complains about CEOs pocketing taxpayer dollars, there are more of the executives working for reduced pay than Unions have given up. If anybody is taking the treasury and running, Union labor is not doing too bad on that, and they are the only ones not truly being held feet to the fire so far.
But the point is, and should be, that the government has no business in business. Nationalizing private enterprise is a road that we do NOT want to go down.
Outsourcing will be nothing compared to the government grinding business to a halt in this country, all "in order to save it." Bush was WRONG, and Obama is WRONG FASTER.
Stealthmonk 7:40AM (4/24/2009)
If Chrysler declare bankruptcy in some other state, the burden will be on state reps to travel to attend proceedings, and that "would undoubtedly lead to unjust bills."
Ya all the retired worker loss their retirement. Will have to live on $400 a month (SS), and the state reps has a burden to travel.
Chrysler owns Billions to all their suppliers. Bankruptcy will let them get out of paying them. Over 80% of them will have to file bankruptcy too. All the workers will be out of work , and the state reps has a burden to travel.
Poor, Poor State Reps that spent millions on traveling to vacations out side of the US. poor them
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Redtrk 7:35AM (4/24/2009)
Does our government leaders still think that NAFTA is a great idea?
GM and Chrysler has been closing American plants to start Canada and Mexico plants. Millions of American company's are moving to Mexico yearly. More Americans are out of work then ever before.
So I'll ask again, Does our government leaders still think that NAFTA is a great idea?
Oh yes even Obama said it needs to change but he don't want to hurt the jobs in Mexico and Canada. Ya.. thats going to help bring jobs to America..Oh ya where is all the Billions of green jobs he talked about? Go cut your grass with your lawnmover
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Frank 7:57AM (4/24/2009)
If either GM or Chrysler go the BR route they should file in the state they are incorporated in, Delaware. There are two reasons most companies incorporate in Delaware.
One is that it's relatively cheap and easy to do, and the state has pretty clear laws about what is required to do it. The other is that Delaware.has a great business court system with lawyers and judges that are among the most experienced in their field, plus a very established history of case precedents to go by. What this does for both plaintifs and defendants is give them a court system that doesn't surprise you with off the wall rulings.
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Luis 8:23AM (4/24/2009)
They are based in MI, they should file in MI.
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jay 10:16AM (4/24/2009)
Most of these companies are probably technically based in Delaware actually. I think the real reason that the Michigan AG is concerned is because of the homegrown protective laws that auto suppliers enjoy in the state (i.e. Michigan Tool Lien Act). Basically, it gives the supplier a higher priority to assets than other parties. In a normal bankruptcy, the highest priority in all assets goes to the secured creditor (usually a big bank). Basically if GM files in another state, there's a good shot that those supplier friendly laws aren't applied and automotive suppliers get left with next to nothing. If they file in MI, there's a good shot the big bank secured creditors will not get as much, if anything at all. That's just my hunch.