Eating words in Detroit

GM quotes: No one expects corporate chieftans to happily embrace the prospect of bankruptcy. So it’s no surprise that General Motors bosses vociferously denied the need for the troubled carmaker to file for Chapter 11 protection from its creditors. But they have been trying to shrug off the prospect for almost four years – as long as Breakingviews has been advocating it.

That in itself is telling. So we have collected a small handful of examples of how the Detroit carmaker’s senior executives sought to fend off such suggestions. Some are bullish, some bullheaded – while others betray the belief that GM’s bosses thought time was always on their side.

Resounding dismissal

“I’d just like to set the record straight here and now. There is absolutely no plan, strategy or intention for GM to file for bankruptcy.” — Rick Wagoner, GM CEO, in an internal memo to employees, November 2005

“I don’t care which junior analyst on Wall Street or two years out of Harvard B-School says – ‘Oh, well, General Motors inevitably headed for bankruptcy’ - Well you know, our view of that is, that’s a crock. It’s not going to happen.” — Bob Lutz, GM’s vice chairman of product development, January 2006

“Bankruptcy is a very bad idea, and just about everybody associated with GM, from customers, to employees, to retirees, to suppliers, just about anybody, to dealers, loses…I think we can do better for our employees, too, than running and hiding from problems by bankruptcy. We think we can sit down across the table and say: ‘Hey, we can’t maybe give you everything we’ve given you in the past, but we can continue to offer very fair benefit programs, but we’re going to need to work together in cutting the costs of those.’” — Wagoner, interview with PBS, April 2006. The pressure builds anew

“We have no thought of [bankruptcy] whatsoever.” — Wagoner, responding to a question from the audience at an event in Dallas, July 2008

“Clearly we face unprecedented challenges related to uncertainty in the financial markets globally and weakening economic fundamentals in many key markets. But bankruptcy protection is not an option GM is considering. Bankruptcy would not be in the interests of our employees, stockholders, suppliers or customers.”— General Motors statement, October 2008

It’s just the worst option possible, honest

Bankruptcy would force GM to “liquidate the company because you wouldn’t have any revenue”.

SO GM has “concluded it should put virtually all effort into avoiding” bankruptcy. — Wagoner, before the House Financial Services Committee, November 2008

“We developed a plan that would allow us to be robust and pay back the loans, even with a very difficult set of economic assumptions.” — Fritz Henderson, General Motors president, explaining why bankruptcy isn’t a viable, or indeed necessary, option for the struggling US car maker. December 2008

Accepting the inevitable

Bankruptcy is “certainly more probable…Our preference would be to use the next 60 days to accomplish [restructuring] out of the court process,” said Henderson. “If we’re not successful doing it out of court, we’ll do it in court.”

Henderson, now GM’s CEO after Rick Wagoner forced out by Obama administration, speaking to reporters, March 2009. “There are no second chances. We won’t need one.”— Henderson, speaking to reporters after GM filed for bankruptcy, June 2009