The GM (GM) board is looking at a Chapter 11 as a way to get the car company out of its mess. Even if Congress approves funds for the car company, it might insist on a pre-packed bankruptcy to wipe out common shareholders, debt obligations, and significant parts of its liabilities for UAW retirement and health care programs.
In other words, the new VEBA fund may never get the cash due to it from GM, putting hundreds of thousands of current and former GM workers into the ranks of the uninsured.
The UAW only has one point of leverage now and that is a strike. A work stoppage would undermine any attempt to allow the company to operate "normally" under court protection. A bankruptcy judge would certainly mandate that the union return to work and senior UAW officials might spend some time in jail when the union ignores the order.
It is impossible to say how much the market downturn has reduced the amount of capital available in the UAW strike find. In January 2007, the Detroit News said that the union had $874 million. Even at half that, the UAW could support a long enough strike to make the court and GM negotiate with it over benefits.
Douglas A. McIntyre