Detroit, MI – General Motors Corp., nearing a federally imposed deadline to present a restructuring plan, will offer the government two costly alternatives: commit billions more in bailout money to fund the company’s operations, or provide financial backing as part of a bankruptcy filing, said people familiar with GM’s thinking.
Subscribe to our Daily Roundup Email
The competing choices, which highlight GM’s rapidly deteriorating operations, present a dilemma for Congress and the Obama administration. If they refuse to provide additional aid to GM on top of the $13.4 billion already committed they risk seeing an industrial icon fall into bankruptcy.
Some experts and members of Congress say bankruptcy reorganization is the surest way for GM to cut costs and become viable. But it could be a politically unpalatable development during a recession that already has thrown millions of workers out of jobs.
[GM may close more plants under a restructuring plan it must present to the Treasury by Tuesday. Its Hamtramck, Mich., plant has been idled.] Fabrizio Costantini for the Wall Street Journal
GM may close more plants under a restructuring plan it must present to the Treasury by Tuesday. Its Hamtramck, Mich., plant has been idled.
Treasury Department officials believe GM needs at least $5 billion more in U.S. loans to keep operating beyond the first quarter, said people familiar with the situation.
The call for additional funds will be a key part of the revitalization plan GM is required to file with the Treasury by Tuesday, though it is unclear whether GM will furnish a dollar amount, said people familiar with the matter. The plan is supposed to describe how the company will become self-sustaining and better compete with foreign rivals.
But it’s increasingly unlikely GM will have a finished plan in time. Negotiations with GM’s unions and bondholders haven’t yet produced commitments to concrete concessions as required by terms of the federal loans; talks are expected to continue over the holiday weekend. People involved in the talks say progress has been slowed by the fact the Obama administration has yet to appoint a “car czar,” as envisioned by the bailout program.
GM will argue it needs the additional government funds to stay out of bankruptcy court, people familiar with the matter said. At the same time, the company — which previously had dismissed suggestions that it might need to file for bankruptcy — has moved closer to such a prospect.
GM believes government funds would be needed for debtor-in-possession financing should the company seek bankruptcy because such money wouldn’t be available from private sources, said people familiar with the situation.
[GM chart]
The auto maker eventually may seek permission to extend the March 31 deadline to complete certain restructuring actions by at least several months.
Rick Wagoner, GM’s chairman and chief executive, once fiercely opposed a bankruptcy filing, saying it would scare off customers. But his opinion has softened, and he has been influential in shaping the plan for a possible filing, said people involved in the strategy.
Just give them more money we Senators & Govt. Workers don’t pay anyway taxes
One word…..GREED. The executives of the company will not go to the unemployment offices, but many workers sure will.
We can only hope they file for bankruptcy… let them reorganize and retool.
#1 – don’t forget, the greedy UAW is just as much fault as the greedy executives. So is Congress – those 535 automobile experts have been picking the big 3’s pockets for years. Plus they also have put these wild CAFE rules for fuel efficiency, which has the Big 3 making two lines – SUVs and trucks that are profitable and small cars that they lose money on.
We the people vote with our wallets what cars we want to drive.
the management are disgusting pigs. Now that they will surely go bankrupt what did the taxpayer get for delaying this tactic at the cost of Billions?
Take away all the money from the rich and give it to the poor! Kofin al hatzedakah! Obama has it right.
I say bankruptcy
another sign america isnt going to last. pack up ur stuff and go to israel. at least u can spend your money on a sure investment. not only will you be protected (see yoel 3:5 and malbim), u may be lucky enough to greet Moshiach too!
Would’nt it make sense to pass a law that every state or city owned car needs to be an American made car. Almost every car the city ownes is a toyota or honda. They should be the first to support the american carmakers.
Let them go belly up! The govt got them into this mess in the first place by making all sorts of stupid wastful restrictions on them. The EnviroWakko R’shoyim keep screaming when in fact motor vehicles built today are “cleaner” than ever. The govt wants them to built more hybrids but people dont want that kind of car! Ford just added another shift to its pickup truck line for goodness sakes! You cant force people to drive dreqy cars. Oh and lets not forget the unions who are very guilty here as well.
GM should come out saying they are going chap 11 reorganization to break the union etc., and lets see everyone who falls in love with them. They should also volunteer to “buy back” or replace free of charge any vehicle out there (such as mine) which has had problems since day 1 that they refuse to take any “credit” for.
The problem is the stupid Unions! They have destroyed our economy as we know it.
let them go bankrupt .ive been folowing the auto trade out of passion for years . all i can say ford was in truble too ,they once haved 5 of the best selling cars in the u.s the f150,econoline van,explorer,taurs,escort; but then they got carried away with thier houge success and they lost focus and starded loosing capital . but not anymore why? they sold off non profitble brands disscontinued boring models , invested in hybrids totaly reinvented those famous nameplats, and the future looks bright for them with the f150 again being voted as truck of the year thier fusion hybrid is rated far better than accord or camry hybrids and a new taurs in the pipeline that will once again rival the best of europe . and all that without gov.funding . so i say let them fall on thier nose and when theyll rise they will imerge stronger.
gm = ganiv monster get rid of them