| | Obama team considering bankruptcy plan for automakers
 Chapter 11 may be looming for General Motors.
President-Elect Barack Obama's transition team is considering a "prepackaged" bankruptcy plan for automakers as a solution to the looming cash-flow crisis, Bloomberg News reports Friday.
"Obama's team has already contacted at least one bankruptcy- law firm to say that Daniel Tarullo, a professor at Georgetown University's law school who heads Obama's economic policy working group, would call to discuss the workings of a so-called prepack, according to this person," the wire said.
Bloomberg adds: "U.S. lawmakers yesterday postponed until December a vote on whether to give General Motors Corp., Ford Motor Co. and Chrysler LLC a $25 billion bailout as an alternative. Automakers such as GM could use court protection to reduce debt and reject unfavorable contracts.
Bankruptcy has been floated by those in the financial community as an alternative to bridge loans from the government, because the automakers could then temporarily halt payments to suppliers and creditors as they reorganize.
"'It creates the environment to deal with GM's problems but limits government financial commitment,'" said bankruptcy lawyer Mark Bane of Ropes & Gray in New York.
Obama spokeswoman Stephanie Cutter said, "We have not put out anything specific for the auto industry except that something needs to be done immediately."
FULL STORY HERE.
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