For Whom the Bell Tolls
GM told to prepare for bankruptcy
The Treasury Department is directing General Motors to lay the groundwork for a bankruptcy filing by a June 1 deadline.
The goal is to prepare for a fast “surgical” bankruptcy, the people who had been briefed on the plans said. G.M., which has been granted $13.4 billion in federal aid, insists that a quick restructuring is necessary so its image and sales are not damaged permanently.
Treasury officials are examining one potential outcome in which the “good G.M.” enters and exits bankruptcy protection in as little as two weeks, using $5 billion to $7 billion in federal financing, a person who had been briefed on the prospect said last week.
The rest of G.M. may require as much as $70 billion in government financing, and possibly more to resolve the health care obligations and the liquidation of the factories, according to legal experts and federal officials.
Of course, GM could theoretically reach an agreement with the UAW and GM bondholders to exchange roughly $28 billion in debt into GM Equity before the deadline, but I’ll not start holding my breath now.
Tags: Automotives, bailout, Bankruptcy, Big Three, credit crisis, current events, Detroit, economy, GM, rip off, stock market, UAW, Washington