Academic

The GM Sale--Skeel

By David Skeel and Bill Stuntz

Although GM is vastly larger and more significant than Chrysler, its "sale"-- which was approved by the bankruptcy court late yesterday-- has received far less attention.  There seem to be two reasons for this.

The first is a been-there-done-that effect.  After many participants and observers complained about the problems with the Chrysler sale, and the objections were brushed aside as expected, there was even less suspense and therefore less media interest with GM.  Chrysler's executives griped during their negotiations with the government that their company was being used as a "guinea pig" for GM, and so it was.

The second reason is that GM and the government adjusted the "sale" strategy to make it less egregious than the Chrysler sale.  Some of the troubling features remained (such as a bidding process that made other, genuine bids nearly impossible).  But the GM sale does not stiff the senior lenders, as the Chrysler sale did.  And after nearly universal criticism of the failure to make any provision for products liability claimants, New GM now has agreed to pay the claims of future victims. 

If anyone finds that these technical ramblings make you long for more detail, Professor Mark Roe and I have just finished a draft of a law review article that critiques the Chrysler sale in much more detail.   The link is here.

Full post as published by Less than the Least on July 06, 2009 (boomark / email).