If I have the gist of a 363 bankruptcy correct,it is this:
- Company A files for bankruptcy.
- Company A forms Company B.
- Company B "acquires" all of the good assets from Company A.
- Company B opens for business using Company A's former good assets.
- Company A is left to go through bankruptcy with only its bad assets, and therefore into insolvency.
So to simplify this, through legal wrangling a company gets to remove all of the bad assets out of its holdings, keep the good assets, and continue on in business. Obviously there are further complexities, like who owns the new company, etc. But it is basically a way of hiding the bad assets away and keep the good ones.
How is that different than accounting fraud? Similar to the fraud that Enron and Tyco were guilty of. Oh, the difference is that the government is for, and not only for but behind this fraud. Meantime, bond holders and other debtors get the shaft. And favored government entities, like the UAW, come away with large chunks of ownership of the "new" company.
This should fly in the face of every right-thinking, capitalistic American. It could be argued that debtors were stupid to allow GM to run up as much as $20 billion in debt, and therefore incur the risks that kind of lending includes. However, to just let a company purge itself of bad assets, keep the good ones, and go on with business undermines our entire economic system.
Then again, anything the Obama administration is involved in undermines America.