GM Lawyer Plans ‘Futuristic’ Restructuring as Auto Bailout Fails
Updated: General Motors has hired two noted bankruptcy lawyers amid the collapse of an auto bailout in Congress. One of them, Martin Bienenstock of Dewey & LeBoeuf, is said to be devising a speedy plan to remake the automaker into a 21st century success.
Democrats and Republicans in the Senate failed to reach agreement on a $14 billion bailout plan Thursday evening after the GOP sought quick cuts in pay and benefits for union workers that would bring labor costs in line with Japanese auto companies, the Wall Street Journal reports.
The White House said this morning it would consider using funds designated for the Wall Street bailout to help the automakers, the New York Times reports.
GM chief executive officer Rick Wagoner fears a bankruptcy filing would scare off car buyers, but the company has hired several high-profile restructuring advisers, the Wall Street Journal story says. They include Bienenstock and Harvey Miller of Weil Gotshal & Manges.
A source told Bloomberg that Bienenstock hopes to help GM use the bankruptcy process to create a “futuristic” automaker for the 21st century. Bienenstock was the lead lawyer on the Enron bankruptcy and was a former GM lawyer until he left Weil Gotshal for Dewey in 2007.
Bienenstock’s plan is to create a new company to oversee GM’s best auto lines, with the proceeds going to the auto unions to win their support, the Bloomberg story says.
“Redundant brands, surplus dealers and so-called legacy costs would be hived off in bankruptcy court,” the story says. Most reorganizations can take two years or more, but Bienenstock has told GM his restructuring plan can be completed in 30 to 90 days.
Chrysler hired Jones Day in November to advise it of bankruptcy options, the Detroit News reports.
Meanwhile GMAC, the largest lender to General Motors, could also be on the verge of bankruptcy, according to a Bloomberg report cited in the Am Law Daily. Last month GMAC hired Wachtell, Lipton, Rosen, & Katz in an effort to obtain federal bailout money. It’s not clear if the firm would represent GMAC in a bankruptcy, the Am Law story says.
Updated at 9:20 a.m. to include New York Times information that the White House is considering using Wall Street bailout money to aid automakers.
