Bankruptcy's Better

... Filing for Chapter 11 protection under bankruptcy law is the normal way a company stays in business when facing an unmanageable financial situation. It keeps creditors at bay while the company reorganizes under court supervision and settles its debts, and frees companies from union contracts. But this could be why Democrats have taken the option off the table? [snip]

• During the last round of contract talks in 2007, the average hourly costs were over $70 at all three of the domestic automakers, compared to about $48 for Toyota.
• Detroit's unionized plants put them at a disadvantage to foreign rivals which run lower-cost, nonunion operations.

But even if some federal loans or loan guarantees can't be avoided, Washington needs to make Detroit's experience as close to Chapter 11 as possible. Some suggestions: zero out the equity investors, replace management, shut down surplus dealerships and force the UAW to face the fact that its extortion days are gone forever...

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