German Interior Minister Wolfgang Schaeuble said in a newspaper interview today that insolvency could be an option for Opel, GM’s German subsidiary.
“In cases like Opel, one should seriously consider exercising insolvency law. Our modern insolvency law is not set up for the destruction but for the preservation of economic assets,” Schaeuble, a member of Chancellor Angela Merkel’s Christian Democrats, told Handelsblatt business daily.
“The public perception is that insolvency is associated with going bust or bankruptcy. But that is wrong. We must grasp that to survive such a crisis, modern insolvency rules are a better solution than the state taking a stake.”
If Opel is allowed to fall into bankruptcy, it may open the door for other governments to let the same thing happen to their automotive industries – and right now, the most likely government to do that is the U.S. Although it has shelled out billions of dollars to support Chrysler and GM, the support can only go on for so long: sales are continuing to lower despite forecasts that they wouldn’t get much worse, and both companies are burning through billions each month.
The fates of Chrysler and GM have been placed in the hands of the Obama administration’s automotive task force, which must decide by March 31 if it believes the companies can become viable in the long-term and deserve more funding. The administration has said that bankruptcy has not been ruled out as an option for the automakers.
Opel needs about $4.15 billion in government aid to survive, and GM Europe leader Carl-Peter Forster has said that Germany – where 25,000 Opel workers are employed – would need to supply most of the money needed. Angela Merkel is still considering aid for the automaker, but Finance Minister Peer Steinbrueck said yesterday the restructuring plan submitted for Opel is no basis for supplying the funds.
If Opel cannot supply details for its restructuring plan that satisfy Merkel and her party, it is likely to fall into bankruptcy.