Word: gm
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...GM is headquartered in Detroit and employs more than 53,000 people in Michigan, but in the corporate-bankruptcy system, courts compete for cases - especially big ones - so the company could easily wind up at a courthouse hundreds of miles away. Likely venues include Wilmington, Del., the state in which GM is incorporated, and New York City, which has a history of landing large out-of-town cases, such as those involving WorldCom and Enron. (See the 50 worst cars of all time...
...York City and 34% filed in Wilmington, even though companies were headquartered in New York City only 7% of the time and in Wilmington less than 1% of the time. Executives typically decide where to file on the advice of their legal counsel. The two law firms that GM has hired to advise it on bankruptcy - Weil, Gotshal & Manges and Dewey & LeBoeuf - are both based in New York City...
...bankruptcy court in eastern Michigan, though, is determined to do what it can to land a possible GM bankruptcy, as well as a potential Chrysler case. In December the court's six judges signed off on new rules that, among other things, allow the chief judge to divvy up the workload of a "very large, complex case of national significance" to keep such a bankruptcy running smoothly and quickly...
...though the Michigan court has deep experience with auto-related bankruptcies - it has handled those of partsmakers such as Collins & Aikman, Intermet and Plastech Engineered Products - and has fielded its share of megacases, including the landmark bankruptcy that resulted from lawsuits against Dow Corning over silicone breast implants, landing GM may be an uphill battle. "The [lawyers] for the automobile companies sleep much closer to New York and Delaware than they do to Detroit," says Hugh Ray, a partner at the Houston-based law firm Andrews Kurth who is also admitted to the New York bar. "You're afraid...
...GM and the people who would be affected by its bankruptcy, the issues are more prosaic. Consider that scores of suppliers could go under if GM does. Or think of the money owed to hundreds of companies that provide all manner of services to GM. One creditor in the Enron bankruptcy was a local lock-and-safe company; another was an airport car-service firm. Hiring out-of-state lawyers, traveling and staying for months in a city far from home - these might be prohibitive costs to outfits already reeling from GM's fate. "There is no district in this...