Attorney Martin Mushkin: The Specifics of a GM, Ford, or Chrysler Bankruptcy

Share Article

Mushkin has published the backgrounder, "American Auto Companies and Chapter 11: How the Legal Proceeding Might Work."

American Auto Companies and Chapter 11: How the Legal Proceeding Might Work.

Past News Releases

RSS

While it looks as though the government is ready to sign on to a $14 billion bailout for GM, Ford, and Chrysler, pundits and the public are crying foul. According to Martin Mushkin (http://www.mushkinlaw.com)]], an attorney specializing in securities and business law, "These reactions, along with the reality that a mere $14 billion spread around before Christmas may not be enough to keep automakers afloat, fuels speculation that one or more U.S. car manufacturers may face a bankruptcy proceeding."

Mushkin is quick to note that, while the term "bankruptcy" has been bandied about, little attention has been paid to the procedures involved in Chapter 11 bankruptcy. For that reason, Mushkin has published the backgrounder, "American Auto Companies and Chapter 11: How the Legal Proceeding Might Work."

In the paper, Mushkin covers the history of U.S. bankruptcy law and how it has evolved over the past century, and delves into the myriad players in a bankruptcy proceeding, such as stockholders, boards of directors, management, secured creditors, and unsecured creditors. Next, he explains the concepts of "debtor-in-possession" and "plan of reorganization. Finally, Mushkin discusses the actual bankruptcy proceeding and the best- and worst-case outcomes, all against the backdrop of the U.S. auto manufacturing crisis.

Given the financial crunch facing the auto industry and the larger global economic downturn that has caused businesses across virtually every industry to go under, it's helpful to understand the structure of bankruptcy law and brush up on how Chapter 11 works.

Yet, Mushkin noted that Chapter 11 is a drastic remedy - especially for U.S. automakers - and one that puts taxpayers at risk. "Lack of immediate cash may be a symptom, but it is rarely the reason a Chapter 11 proceeding is necessary," he said. "U.S. auto companies may have been taking steps to repair their business models, but the appearance is that they are not nimble enough to compete with foreign automakers. The variables make the outcome of the application of Chapter 11 supported by the U.S. Treasury one of high risk."

About the Law Office of Martin Mushkin LLC
The attorneys at the Law Office of Martin Mushkin LLC are experts in securities and business law, and practice in New York and Connecticut. Martin Mushkin and his colleagues can brief you about Chapter 11 legal proceedings as they may apply to U.S. automakers, as well as securities fraud and other topics related to the current economic downturn.

For more information, contact:
Martin Mushkin
The Law Office of Martin Mushkin LLC
http://www.MushkinLaw.com
203.252.2357

###

Share article on social media or email:

View article via:

Pdf Print

Contact Author

Visit website