Would a G.M. Bankruptcy Save Taxpayer Money?

As General Motors and Chrysler race to pull together their restructuring plans ahead of a government-mandated deadline on Tuesday, one of the top academic experts on distressed debt and bankruptcy is calling for the Obama administration to dispense with niceties and push the carmakers into bankruptcy.

If done right, the move could help ensure that taxpayers remain first in line for repayment, according to Edward I. Altman, the Max L. Heine professor of finance at New York University’s Stern School of Business.

“The question is, does the Obama administration have the courage to take that next step?” Mr. Altman told DealBook on Sunday.

It is a stance that Mr. Altman, who is the director of N.Y.U.’s credit and debt markets research program, has publicly espoused for some time. Chief among his concerns now, however, is not only reaching a way to restructure G.M. and Chrysler in the least painful way for the companies, but also to protect the billions of dollars in government money lent to the companies.

Read the full article at the N.Y. Times Dealbook; edited by Andrew Ross Sorkin

Date published: Feb 16, 2009

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