The U.S. Treasury Department is reportedly pressing General Motors to prepare for a bankruptcy filing by June 1. According to a report in the New York Times, Obama administration officials have been meeting with G.M. to lay the groundwork for a quick “surgical bankruptcy” in the event the automaker fails to reach an agreement with its bondholders on converting US$28 billion in debt into equity in G.M. and with the union representing its workers on new concessions. One possible outcome would see G.M.’s good assets sold off almost immediately, while its less desirable ones would be liquidated over several years. It’s thought the “good G.M.” could exit bankruptcy in as little as two weeks. Meanwhile, the government would prop up the “bad G.M.” with as much as $70 billion to cover health care costs and the sale of its assets. The stock plunged 16 per cent on Monday.
Laying the groundwork for a “surgical” bankruptcy at G.M.
Stock plunges 16 per cent on Monday
FILED UNDER: Business