Michigan Attorney General pleads for automakers to declare bankruptcy in state
(Source: Autoblog & Detroit Free Press)
As in a basketball game when players are yanking on jerseys trying to block each other out under the basket, General Motors and Chrysler’s creditors have officially begun jockeying for position.
Michigan’s Attorney General, Mike Cox, has sent letters to the CEOs at both companies to ask that, if they file for bankruptcy, they do it in Michigan. Why? Because that would be more convenient to the creditors that GM and Chrysler have in Michigan.
“I am gravely concerned about the impact of any bankruptcy filing in a jurisdiction outside Michigan,” Cox wrote in separate letters to GM CEO Fritz Henderson and Chrysler CEO Bob Nardelli.
Cox goes on to say that the financial health of both companies and Michigan have been intertwined for decades.
The state is a significant creditor for each of the troubled automakers through the Michigan Business and Single Business Tax obligations, workers’ compensation claims, unemployment insurance and environmental regulations.
“The costs for many of these creditors (in Michigan) to participate in a New York or Delaware bankruptcy is overwhelming and would undoubtedly lead to unjust bills,” Cox said.
While Cox does not say that either company should file for bankruptcy, neither does he acknowledge that they might not need to if they meet certain criteria set by the U.S. Treasury Department.
“If you ultimately decide to choose bankruptcy as the vehicle to a stronger (company), I respectfully ask that you and your representatives meet with me before any filing is made,” the letter concludes. “Please feel free to contact me at any time, day or night, to discuss this matter.”
