Bankruptcy law is rich with colorful vernacular: cram-down, strip-down, haircut, matrix, etc. But until a few weeks ago, nobody had ever heard of a “surgical” bankruptcy, the Obama Administration’s preferred term for a very big business, like General Motors, whizzing through bankruptcy in just a few weeks flat, rather than the normal year or year-and-a-half for a speedy case.
Whatever it means, most bankruptcy attorneys agreed that it couldn’t be done. After all, if a single party–creditor, unions, dealers–objected to anything at all, it could take months to reach a resolution.
But the Obama Administration is more creative than that. It recognized that, in bankruptcy, most parties are squabbling to get paid what they’re owed, so if you put in a pile of money, there’s less squabbling.
So how much money? Today’s N.Y. Times reports that the Administration foresees as much as $77 billion in government financing–over $300,000 per GM employee.
That, apparently, is a “surgical” bankruptcy.
Let us join the Administration in coining a new term: “bankrupcy lite.” The definition: “A half-hearted reorganization in bankruptcy orchestrated for speed rather than long-term durability and financed with taxpayer dollars. A bailout disguised as a bankruptcy.”