Essay: Modern Bankruptcy - 7.7.09

Michigan Radio’s Political Analyst Jack Lessenberry is thinking about the old, and new, General Motors...

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Here’s something interesting about our current economic troubles. For one thing, they have altered the language. Not too many years ago, the only time you heard the term “bailout” was when you were watching movies about World War II fighter pilots.

Now bailout may be the most overused word in the language. My dentist, for example, suggested I seek a government bailout for my mouth, which I didn’t appreciate.

Especially because I didn’t see any chance of getting one, even though my teeth are on their third or fourth restructuring. If that isn’t bad enough, the fruit market where I shop had a “bailout sale” on romaine lettuce a few weeks ago.

Clearly this has gotten out of hand. I am ready to move onwards and upwards to new and better mixed metaphors and misuse of terms, and I think the General Motors bankruptcy is going to offer us a once-in-a-lifetime chance.

Now, if you are relatively young, you may not believe this, but there was a time when bankruptcy had sort of a stigma about it, when companies worked hard to avoid falling into Chapter 11.

Those days are long gone. Today, the main street of life appears to be on-the-rocks alley. I have heard stories about young engineers at Ford who can’t get a date these days.

And no wonder. No self-respecting sexy young person is going to go out with somebody whose firm hasn’t achieved bankruptcy yet.

Not in Michigan, anyway.

But the thing I find most intriguing about modern bankruptcy is the concept of dividing a firm into two parts, as in, for want of a better example, the “good GM,“ and the “bad GM.”

Here’s how that works, as I understand it. What General Motors is now going through is nothing like the old-fashioned bankruptcy our fathers feared. It is more like a government-run rite of purification.

By the end of this week, something called the “New GM” is expected to emerge from the courts. As I understand it, the New GM will consist of everything good in the company, everything that is potentially profitable. Corvettes, for example, and Cadillacs. It will also be controlled by the U.S. government, which owns most of it.

By contrast, the Old GM is all the bad stuff. Obsolete factories, about 50 of them, many of which have serious environmental problems. The man who will be CEO of the rotten bad old GM is Al Koch, who ran a Southfield-based business consulting firm.

His job will be to dispose of those plants and then try to wrestle with everybody who says General Motors owes them money. After that, his job will be liquidating the old GM, putting it out of business.

I think that sounds a lot more fun than running the new GM under government supervision and heavy pressure to make a profit. I plan to keep my eye on what goes on at the old GM.

If all that works out, I might ask if he could help me divide myself into the Old Lessenberry and the New Lessenberry.

I’m sure I’d do better at life. I’m just not too sure about the liquidation part.

Comments

[Amy Salyer]

Thanks, I needed that.

Your keen appreciation of absurdity coupled with your knowledge of history and ability to tie it to personal experience is something I value.

P.S. Your delivery needs work. Still, not bad. Cheers, comrade.

[Ralph]

I've always enjoyed Lessenberry's delivery, but to each his own.