Implications of a GM Bankruptcy

I normally take the train to work, but did my part to stem further deflation in energy prices by driving my 14 mpg pickup truck this morning.  The commute gave me the opportunity to listen to NPR.  I caught a good interview with bankruptcy expert Douglas Baird, a professor at the University of Chicago’s law school.

In the brief but insightful interview on GM, Baird highlights that, for non-financial companies, Chapter 11 bankruptcy’s biggest downside is to shareholders and bondholders.   Chapter 11 is designed to keep production and sale of goods and services going.  The fundamental problem has been that consumers don’t want to buy enough GM products — a bailout will do nothing to solve that, but sometimes bankruptcies can force better corporate introspection and reform.  It’s worth listening to the interview – click here to be taken to the NPR page and then click on the Listen Now icon.

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