Barack Obama’s transition team is looking at a streamlined, “prepackaged” bankruptcy for the Big Three automakers, Bloomberg reports. In a “prepack,” the companies already would have financing lined up when they go to court, and would have to reach agreements with banks, workers, and suppliers. The government likely would provide financing, but it “limits government financial commitment,” one lawyer said.
So far, though, the idea isn’t popular. Chrysler's CEO said a prepack would be “more negative” than restructuring, and officials from Ford and General Motors have examined and rejected the idea. Democratic legislators also are against bankruptcy. But if the goal is the save the companies and protect the government, “the logical step is a prepack,” a restructuring adviser said.