General Motors’ bankruptcy filing Monday was sold by the company and the U.S. government as a positive: an opportunity for the automaker’s expedited rebirth as a smaller, leaner, more consumer-focused corporation.
In reality, it’s a risky play for the economy. If all goes according to plan, the impact should be confined mostly to the auto industry. If it comes apart, the fallout could drag the economy into a deeper recession.
GM became the fourth-largest company to file for bankruptcy protection in U.S. history, following by just 32 days Chrysler’s bankruptcy filing. The filing came on a day when Chrysler’s bankruptcy judge cleared the way for that company’s sale to Italian automaker Fiat.
That was evidence, President Obama said, that it’s possible for a carmaker to go through a quick bankruptcy procedure to clean up its balance sheet and emerge with its customer base intact.
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