The decline of General Motors may be putting thousands of auto workers and managers out of work, but it will be putting a lot of lawyers to work.
How many lawyers will end up working on G.M.’s expected bankruptcy case still is not clear, but in legal circles, the joke is that there may not be enough experienced bankruptcy lawyers available to handle the filing.
In part, that is because so many top lawyers are already running up lots of billable hours working on the Chrysler bankruptcy case, while others have been hired by the government, which is financing the way through bankruptcy for Chrysler and, presumably, G.M.
It is not just lawyers who will be busy handling a G.M. bankruptcy filing, which would be perhaps the biggest and most-watched in legal history. Because of its size and scope, the bankruptcy would be the most complicated that any American company has gone through — more complex than those of Chrysler and Lehman Brothers, two other notable bankruptcy cases now making their way through the system.
The G.M. filing, which is expected to occur by June 1 as part of a restructuring orchestrated by the federal government, will generate so much economic activity — like hotel bookings, restaurant dining and expanded office rentals — that Detroit is hoping that the case will be filed in the local bankruptcy court.
That is unlikely, however, as bankruptcy cases are typically handled in New York or Delaware, where many business are incorporated and the bankruptcy courts have more experience handling complex filings.
G.M., the Treasury Department, the United Automobile Workers, suppliers, dealers and other vendors all will have legal representatives on hand, meaning a full house in the New York bankruptcy court where the case is likely to be heard. Although no judge will be assigned until the case is filed, court officials are creating plans for a separate computer server devoted to G.M.’s filing, which will be an even bigger megacase than Chrysler, which received that designation in April.
G.M. will require $40 billion to $70 billion in debtor-in-possession financing to create a new version of G.M. and dispose of its assets, according to people familiar with the case.
Many people thought a G.M. bankruptcy restructuring was simply too complicated to do. “The case would last my lifetime, my son’s lifetime, my grandson’s lifetime and maybe my great-grandson’s lifetime,” Stephen P. Yokich, the late president of the U.A.W., said in a 1995 interview.
The plan is to split G.M.’s good assets from the bad assets, with the idea that the part owning the good assets would be a viable company because it would not be burdened with the other businesses. G.M. would sell desirable brands like Chevrolet and Cadillac to a new company, which would emerge from bankruptcy protection in a few months’ time. Less-attractive assets and liabilities would remain with the old G.M., and eventually be liquidated.
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