Critics say pre-packs "stitch up" unsecured creditors and can allow directors to shed liabilities and buy back the business (under a new company).
(See "Obama Takes The Wheel In Detroit").. President Obama will outline the plans for the automakers in a news conference Monday, including the possibility of a brief bankruptcy to help the companies shed liabilities.
Officials said Obama wants both carmakers to survive, but believes the best chance for success might be a brief, "surgical bankruptcy"–a process one senior administration official described as a "quick rinse" to shed liabilities.
General Motors got some good news in bankruptcy court, when a judge approved the sale of the bulk of the automaker's to "New GM," in a move that will help the car company shed liabilities and get back on its feet.
Gerald Arpey, the airline's boss, will step down in favour of the number two, Tom Horton, who is believed to have been more open to shedding liabilities through the bankruptcy courts.Network airlines are, in America and much of the rich world, licences to lose money or make miserly returns and AMR is certainly no exception.
It joined a half-dozen other companies that filed in that court seeking to shed asbestos liability.
However, Rodriguez's legal team is confident it can show that the entire proceeding is an attempt to allow the Yankees to shed their liability under his contract, which has roughly $95 million remaining on it through 2017.
Late on Tuesday, a coalition of consumer groups asked the bankruptcy court not to let the new Chrysler shed potential liability for any future defective product claims by current vehicle owners.
Above all, Germany's thicket of labour laws, which discourages firms from hiring workers who may prove a hard-to-shed liability.
By pursuing an asset sale, G.M. could be assured of greater speed, certainty and the ability to shed unwanted liabilities, Mr. Wilson said.
