AG Cox Urges Carmakers To File Bankruptcy In Michigan

Story from the Detroit Free Press

Michigan Attorney General Mike Cox has urged chief executives of General Motors Corp. and Chrysler LLC to consider filing for bankruptcy in Michigan rather than Delaware or New York because it would be more convenient for creditors in Michigan.

“I am gravely concerned about the impact of any bankruptcy filing in a jurisdiction outside Michigan,” Cox wrote in separate letters to GM CEO Fritz Henderson and Chrysler CEO Bob Nardelli.

Cox goes on to say that the financial health of both companies and Michigan have been intertwined for decades.

• PDF: Cox's letter to GM

• PDF: Cox's letter to Chrylser

The state is a significant creditor for each of the troubled automakers through the Michigan Business and Single Business Tax obligations, workers’ compensation claims, unemployment insurance and environmental regulations.

“The costs for many of these creditors (in Michigan) to participate in a New York or Delaware bankruptcy is overwhelming and would undoubtedly lead to unjust bills,” Cox said.

“It’s easier for those people to get in line, if it’s here,” said John Selek, a spokesman for the attorney general.

While Cox does not say that either company should file for bankruptcy, neither does he acknowledge that they might not need to if they meet certain criteria set by the U.S. Treasury Department.

“If you ultimately decide to choose bankruptcy as the vehicle to a stronger (company), I respectfully ask that you and your representatives meet with me before any filing is made,” the letter concludes. “Please feel free to contact me at any time, day or night, to discuss this matter.”