NEW YORK (WPIX)—
One of New York's preeminent bankruptcy experts says there is a good chance taxpayers could lose the $50 billion the Obama administration is injecting into collapsed car giant General Motors. "It's a huge gamble," says NYU Stern Finance Professor Dr. Edward Altman.Altman is concerned GM will be emerging from Chapter 11 in the worst possible economic climate. Even if the automotive goliath sheds it's debt in three to four months, the company will be trying to turn a profit in what's predicted to be a ruinous market.
"They could, in fact file again for bankruptcy in two to five years if it doesn't work. We call that Chapter 22, meaning Chapter 11 twice. And if that happens, more than likely, the shareholders will be wiped out which means, we're going to be wiped out!"
On the upside, some local GM dealerships see dollar signs in the bankruptcy filing. Because New York City has some of the nation's highest volume car lots, they are unlikely to be among the thousands that close down. At Major World Chevrolet in Queens, car buyers were busily writing down payment checks Monday night. Managers there say eliminating underperforming dealers will funnel more customers their way. Operations Director Adam Cohen says, so far, he agrees with the Obama plan to make GM profitable.
"Me as a dealer, I would have definitely told you to shrink GM. I would have told you to get rid of Pontiac, like they're doing. Get rid of Saab. Get rid of Hummer. Those are good smart moves."
