Saturday, August 8, 2009

The Good..The Bad...and The Ugly of the GM & Chrysler Bankruptcies

The GM and Chrysler bankruptcies have been concluded and the ink is dry! Today, I am going to cover a number of points concerning the bankruptcies. Every major event that the country endures has good, bad and ugly sides to the event.


First, both bankruptcies were prepackaged by the government and the companies. The speed that they went thru the courts was incredible. The Obama administration had taken the mindset that the quicker this was done the better. The bankruptcies needed to be done quickly so not to hinder the already battered and fragile economy.

Basically, I agree with the administration that the bankruptcies were a necessary and unavoidable step. There was no other choice than a liquidation of the companies with the resulting loss of jobs in the automobile sector...then the job loses would continue into the other sectors....sending the fragile economy into a tail spin down.

It was projected that if the bankruptcy had not been quick and smooth, a protracted legal battle in court could have dire consequences that could be felt across the economy, with about 1.8 million jobs lost over the next 19 months, according to the CAR study.

A protracted legal battle could nearly destroy GM as a company and take down many of its suppliers, who also supply parts to Ford, Toyota and other automakers. It would take time to establish new supply chains if major parts suppliers failed.

So, a best car scenario for the economy was arranged thru a surgical bankruptcy...the impact to the economy was minimal. Several million jobs were saved along with saving the United States automobile industry from total collapse.


A number of people lost jobs and a number of people and organizations lost a lot of money.

1. Employees of GM, Chrysler and suppliers that will be laid off due to the bankrupcy.

2. Dealers that were closed due to the bankruptcies along with their employees.

3. Creditors that GM and Chrysler owed money. The bond holders which included individuals, pensions, various investment groups lost a great portion of their investment.

4. Shareholders - most lost a substantial amount of money.


The worst part of the bankrcupties are the legal claims by victems that were seriously injured or killed by mechanical or structural vehicle failures. This actually applies to all the vehicles that GM and Chrysler made prior to each respective bankrupcy.

So, if some driving a 2009 vehicle that was manufactured prior to June was injured due to a mechanical failure...they would not have any recourse against the manufacturer. One such example is 10 year old Amanda Dinniga, she was riding in a GMC vehicle that crashed and the seatbelt did not work as designed. Amanda was left a quadriplegic and her family will not receive any funds to cover treatment or recuperation.


GM and Chrysler were so mismanaged that it is an American tragedy! I thought that a government sponsored bankruptcy was the best solution.....nothing that has transpired has changed my mind.

But, the government and the auto companies involved could have done a better job. Some people have been bankrupted by the loss of their paycheck, or pensions. Other people had money now they have much less....especially the retired that depended on their pension checks.

It is inexcusable that the government and the courts can let some of the abuses of legal process take place. The worst were the people that were killed or severely injured due to car companies negligence.


  1. Hi Pete well put .. we just don't accept responsibility for anything now-a-days .. and if we can worm out of things we do.

    I'm somewhat experiencing this with my Ma .. I've got through the worst .. but it's not over yet .. it's unfair on the people who suffer ..

    It does look as though the little man, who's saved is going to be hit for a six and will take the brunt ..

    All the best - Hilary Melton-Butcher
    Positive Letters Inspirational Stories

  2. Hi Hilary,

    It is true....the little guys are going to be hit hard. In this case, some of the big guys were hit also.

    What really struck me is how cold they could to people that were really hurt by their actions!
    So, it is no wonder that Americans have gone in mass to other car companies!

    Really enjoyed the English slang terms! Thanks for your comment!

    Pete Baca
    The Car Enthusiast Online

  3. Hello Peter,

    So many where hurt in all of this.Many injustices happened in this mess. They could have done these bankruptcies long before they did and saved the taxpayers a lot of money bailing them out.

    Thank you for the good way that you wrote about it. There is some good, bad and ugly in this. People are going to remember this and how it was handled. The companies are going to get the brunt of that. When the government puts their nose in things it usually ends up bad. They started most of this mess and took no blame for it. We will have to wait and see how this plays out.

    Thank you Peter. Nice post.

    Dan and Deanna "Marketing Unscrambled"

  4. Hi Dan & Deanna,

    It is no wonder that people have some harsh comments about the U.S. companies. There are good business tactics. This showed a lot about the management involved with the respective companies.

    In some ways this was for the greater good! But, I cannot understand leaving people severely hurt without some means of compensation. These people will need care probably for the rest of their lives.

    I agree that prior administrations had not helped the auto industry....they hampered the industry in many ways. The auto industry has no one to blame but themselves for their own mismanagement.

    Thank you for your super comments!

    Pete Baca
    The Car Enthusiast Online

  5. Hello Peter,

    Under the Bush administration, the car industry was gearing up for one kind of car because that is what they wanted hydrogen was it not. They had retooled to do those kinds of cars and now that has all changed with this administration, they want to push something else. Is that not part of the problem that the car industry has faced. The government keeps changing things on them with every administration. The car industry did not have the big bucks to retool all over again. They have not done a good job taking car of the things in industry that is true. The government has made it that much harder on them as well. Can you answer these things, not sure if it is so.

    Dan and Deanna "Marketing Unscrambled"

  6. Hi Dan & Deanna,

    Your correct....there were federal funds available for the development of alternative fuels hydrogen was one of them....also ethanol was another.

    The car companies were spending development dollars on hydrogen development but not producing anything but the ethanol ready vehicles. GM in particular has a number of models that can burn regular gas or ethanol. The ethanol market has been burned lately....a number of companies have gone bankrupt.

    Hydrogen is still in development...we are probably twenty years away from a mass market hydrogen car.

    Yes every administration changes the the car companies don't know which way to go. Also, the car companies were litigating many issues that congress felt was under their control.

    The main issue is a lack of a good energy policy since 1974.....and a consistent CAFE guidelines.

    Thanks for your great question!

    Pete Baca
    The Car Enthusiast Online