How Congress Could Save GM
Ronald Trost is surely one of the sharpest minds in Chapter 11. He negotiated the Chrysler non-bankruptcy bankruptcy back in 1979. (His work is highlighted in Moritz & Seaman, Going for Broke: The Chrysler Story. Jay Westbrook and I still use an excerpt from that book to introduce Chapter 11 negotiations to law students in our casebook.) Ron is now Of Counsel with Vinson & Elkins, and he's still one of the most creative people in the field. In fact, he's laid out a plan for reorganizing GM.
The plan is ingenious. Believing that there's not enough time left to negotiate a consensual Chapter 11 for GM, Ron has an alternative. He takes the best elements of Chapter 11, then short circuits much of the negotiation process to reflect the current economic realities. He shows how Congress could pass a law to resolve many of the most intractable problems, offer government guaranteed financing, and effectively impose a rapid settlement on all the parties. It is a tough-love solution that imposes some pain on everyone, which is exactly what we should expect from a tough-love kind of guy like Ron.
Read the piece because Ron has a very interesting idea for saving the auto industry. But for those Chapter 11 afficionados who hang out on this site, read the piece because Ron offers us a vision of the limits of Chapter 11 and ways--in an emergency--to deal with those limits.
This is the first seriously new thinking I've seen: Tough love that might work.