The leaders of President Barack Obama’s auto task force are focused on restructuring General Motors Corp. and Chrysler LLC outside of bankruptcy court, despite suggestions from some experts that a Chapter 11 filing would be the best way to revamp their troubled operations.
“It sometimes becomes a necessary place for some companies, but it’s certainly not a desired place and it is certainly not our goal to see these companies in bankruptcy, particularly considering the consumer-facing nature of their businesses,” Mr. Rattner, a private-equity executive leading the team said in an interview.
GM had said in December when its U.S. loans were granted that bankruptcy could mean an end to the company because many consumers wouldn’t buy a vehicle from a car maker in Chapter 11. But the company has since softened that stance.
The administration officials said the two auto makers had already spent the cash, and that asking for the funds to be returned immediately would trigger their collapse.
By emphasizing that bankruptcy was not a preferred option, and by removing any threat of putting the auto makers in default by recalling the loans, Mr. Rattner’s team will ease some of the pressure that has been on GM, Chrysler and their constituents to make immediate and sweeping concessions. The team, however, didn’t rule out bankruptcy as a potential option altogether.
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