New General Motors board chairman Kent Kresa is floating the idea that if the company is forced into Chapter 11 bankruptcy, it could split into two companies, a good GM and a bad GM, in order to help it emerge quickly from reorganization as a viable company. Automotive News reports on how this might work:
The good-bad model is “a great idea” and “a very good technique,” Kresa said. “It has its problems, and all of our people are looking at it very hard.”
The concept is a “wonderful idea for allowing a new General Motors to emerge,” he said.
Good assets, for example, might include the Chevrolet and Cadillac brands as the core of a smaller, more viable company. Bad assets presumably would include GM’s marginal brands.
“There are a lot of constituents right now that have some dibs on the assets,” Kresa said. “The bankruptcy has to deal with each of those and make sure that whatever comes out is reasonable. This is not a done deal. We want to do something that would be done quickly.
It is widely assumed that, with or without bankruptcy, GM is going to reduce the number of brands and models they produce. Pontiac, Saturn and Buick will likely be phased out.