The CEOs of the not-so-Big Three made it to DC for committee hearings beginning today at 10:00 AM. According to Bloomberg's sources, GM and Chrysler execs are considering a pre-arranged bankruptcy (which we've already said is a good thing) as a last-resort of getting a multibillion-dollar government loan.
This flies directly in the face of GM CEO Rick Wagoner's past comments that a bankruptcy would mean liquidation because customers would refuse to buy cars from a company that might not be able to back warranties or supply parts. Our sources, whether from inside the General or from the outside, have given us similar arguments in the past.
That hasn't stopped staff for three members of Congress, who've asked restructuring experts if a pre-arranged bankruptcy — negotiated with workers, creditors and lenders — could be used to reorganize the industry without liquidation.
But it's not just the congressional committees at work here. According to another source, a representative of Obama’s team contacted at least one bankruptcy-law firm to say 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.
But don't expect anything on this to come out of this week's hearings as we're also told
"Negotiations are splintered among small groups, making it unlikely a proposed solution such as bankruptcy would emerge until next week at the earliest..."
We'll obviously continue to be all over this story like a fat kid on cake. Stay tuned throughout the day to our "Carpocalypse Now" tag today as we bring you the latest news from D.C.