Bankruptcy means never having to say sorry?
For most people, nothing says failure or hitting bottom like a $50-billion government bailout or bankruptcy — or both.
But you might not know that from the tone of GM officials on Monday as they discussed the automaker’s future after filing the biggest industrial bankruptcy in U.S. history.
In a filing with a New¬† York bankruptcy court, GM blamed “the economic collapse and liquidity crisis that began to surface during the end of 2007 and exploded in 2008″ for its financial crisis.
It also pointed to “exigent economic circumstances” that compelled it to seek a government bailout to “avoid a potentially fatal systemic failure” that would have hurt GM, and hundreds of thousands of others in the auto industry.
Missing from the explanation was an admission of management responsibility for choosing to rely on sales of large vehicles or for backing an ultimately failed course of gradual reform and cost-cutting that failed to turn the tide against $88 billion in losses over four years.
Just hours after GM’s Chapter 11 filing, GM CEO Fritz Henderson went as far as to call the bankruptcy a “once in a lifetime opportunity.”
(A 98-page affidavit submitted by Henderson also steers clear of the question of responsibility for GM’s crisis. In fact, the only use of the term “responsible” is to make the point that GM is “not responsible” for certain retiree benefits.)
Henderson, a 25-year GM veteran installed as CEO after the Obama administration ousted Rick Wagoner in late March, said bankruptcy could sweep away the¬†problems of too much debt, too many dealers and too many workers that have absorbed the attention of senior managers in recent years.
That would free up “mindshare” to focus on the challenge of making fewer but better cars and winning back consumers, he said.
“The GM that many of you knew, the GM that let too many of you down, is history,” Henderson said. “Today marks the beginning of what will be a new company, a new GM dedicated to building the very best cars and trucks, highly fuel-efficient, world-class quality, green technology development.”
Kent Kresa, GM chairman and a director since 2003, agreed that government-backed bankruptcy for GM was the best course to settle the restructuring issues that have absorbed the time and attention of managers and the board.
“All of these things have been a major source of energy to manage over the years,” he said.
Until GM admits more clearly that some of its distress has been self-inflicted, skeptics may question its ability to see its last and best chance at restructuring through to the¬†final step.