David Kirkpatrick

April 8, 2009

Bankruptcy and GM, the countdown

Filed under: Business — Tags: , , — David Kirkpatrick @ 2:09 pm

Unless the public is being seriously misled bankruptcy is the only option for General Motors. And clearly the only option to stay in business in any fashion without being completely funded by taxpayers.

So far the bailout money received by GM? Used to just keep the lights burning. Nothing more.

From the link:

General Motors Corp is in “intense” and “earnest” preparations for a possible bankruptcy filing, a source familiar with the company’s plans told Reuters on Tuesday.

A plan to split the corporation into a “new” company made up of the most successful units, and an “old” one of its less-profitable units, is gaining momentum and is seen as the most sensible configuration, said another source familiar with the talks.

If the plan goes through, the new GM would be expected to assume some previous creditor debt from bankruptcy proceedings, such as secured debt, said the second source, adding that GM bondholders were likely to lose substantial value in bankruptcy.

Certain GM dealer and litigation claims would also be hurt if the new company structure is used as part of a company bankruptcy, said the second source.

The sources requested anonymity because they were not authorized to speak on the record.

GM declined to comment.

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