Apr 16
Written by: Aaron Turpen 82 views
Published on April 16th, 2009 in Electric Cars
The U.S. Treasury Department told General Motors on April 13th to begin laying the groundwork for a June 1st bankruptcy filing. GM is currently running on emergency government bailouts.
The task force overseeing the bailout has told GM that it must cut its costs and reduce its debts in order to continue to receive aid. The White House has given GM sixty days to begin restructuring and to meet those requirements.
Despite GM’s insistence that it can restructure and meet those guidelines without a court-issued bankruptcy, Obama’s administration is insisting that the car maker be prepared for bankruptcy filing. The plan is to prepare for a “surgical” bankruptcy in which “good” assets of GM are converted into a new company.
The government is preparing a backup plan in the (I think likely) event that GM cannot reach an agreement with its bondholders and the United Automobile Workers union.
The bad assets would liquidate over time, retaining the old corporate structure. The government’s plan is to get GM through bankruptcy in as little as 2 weeks using $5-$7 billion in federal financing to ad liquidity to the new corporation.
Source: 1, 2
Tags: bailout, Bankruptcy, GM
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