Michael Levine, who is a former airline executive and currently holds a position as distinguished research scholar and senior lecturer at NYU School of Law, has written a very compelling essay in today’s Wall Street Journal entitled “Why Bankruptcy Is the Best Option for GM”. Last week, I wrote a blog entry entitled “Bailout Blues” in which I noted, among other things, that “…it would make sense to let these firms go through bankruptcy, which would enable them to abrogate and renegotiate existing contracts, sell off or liquidate parts of their businesses that don’t make any sense, and reorganize so that they can come out of bankruptcy with sustainable business models. All that a bailout does now is to encourage the continuation of a broken business model…”. Mr. Levine picks up where I leave off, making a very cogent argument that not only is a Chapter 11 bankruptcy an option, in fact it represents by far and away GM’s best chance at once again becoming a viable business entity.
Published by Jim Garven
My name is Jim Garven. I currently hold appointments at Baylor University as the Frank S. Groner Memorial Chair of Finance and Professor of Finance & Insurance. I also currently serve as an associate editor for Geneva Risk and Insurance Review. At Baylor, I teach courses in managerial economics, risk management, and financial engineering, and my research interests are in corporate risk management, insurance economics, and option pricing theory and applications. Please email your comments about this weblog to James_Garven@baylor.edu. View all posts by Jim Garven