GM Board: Bankruptcy is an option we will consider

| 22 November 2008 01:40

In direct conflict with the statements in Washington by its Chief Executive Rick Wagoner, the General Motors Board of Directors is willing to consider bankruptcy as one of many options. The Wall Street Journal released a story late last night attesting to this fact. Below is a snippet of that story.

Members of General Motors Corp.’s board of directors are willing to consider “all options” for the ailing auto maker, including an eventual filing for bankruptcy protection, a stance that puts them in rare disagreement with Chairman and Chief Executive Rick Wagoner, people familiar with the matter said.

As part of his push to win a federal bailout for the company, Mr. Wagoner told Congress this week that GM management believes bankruptcy protection is not a viable option for the company. Instead, GM is focusing on persuading lawmakers to provide financial help, Mr. Wagoner said.

The board, which in the past has publicly offered Mr. Wagoner its strong support, agrees that seeking government funding is the company’s top priority. But it isn’t willing to dismiss the possibility of a bankruptcy filing, say people familiar with the thinking of the board’s outside directors.

In a statement provided to The Wall Street Journal on Friday, GM said the board had discussed bankruptcy but didn’t view it as a “viable solution to the company’s liquidity problems.” The board “is committed to considering all options in light of circumstances as they may develop.” A GM spokesman, Tony Cervone, said that management is considering doing everything in its power to avoid a filing.

GM said Mr. Wagoner declined to be interviewed. Several of GM’s board members could not be reached for comment on Friday. It is unclear whether the board has hired independent advisers to help it evaluate options it may have to consider.

It is unclear whether these statements show a rift between the board and Wagoner or whether GM’s thinking has evolved as the likelihood of a bailout has decreased.

Source
Bankruptcy Is Option to GM Board – Wall Street Journal

avatar About Edward Harrison

Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty years of business experience. He is also a regular economic and financial commentator on BBC World News, CNBC Television, Business News Network, CBC, Fox Television and RT Television. He speaks six languages, a skill he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College.

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