Uncle Sam Forces GM to Stop and Ask for Directions to Bankruptcy
GM has until June 1 to cut a deal with its workers and bondholders, but the Treasury Department is requiring the automaker to prepare for bankruptcy just in case, according to The New York Times. Newly installed GM chief Fritz Henderson is more receptive to the possibility than his predecessor, but warns, “If we need to resort to bankruptcy, we have to do it quickly.”
New York Times:
The Treasury Department is directing General Motors to lay the groundwork for a bankruptcy filing by a June 1 deadline, despite G.M.’s public contention that it could still reorganize outside court, people with knowledge of the plans said during the weekend.
Members of President Obama’s automotive task force spent last week in meetings and on conference calls with G.M. officials and its advisers in Detroit and Washington. Those talks are expected to continue this week.
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.