Crash Diet: GM Getting In Shape For Chapter 11

By: Associated Press Email
By: Associated Press Email

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Friday, May 29, 2009

With General Motors expected to file for bankruptcy protection as early as Monday, the company is trying to secure whatever cost concessions it can beforehand.

Experts say the better the shape it's in before seeking Chapter 11, the leaner and stronger it can be when emerging.

On Thursday, a bloc of GM's biggest bondholders agreed to a sweetened deal to wipe out $27 billion of the automaker's unsecured debt in exchange for company stock.

GM's union employees finish voting Friday on whether to accept lower benefits. And an announcement is expected on the fate of the Hummer brand, while talks are scheduled to resume in Germany about the future of GM's European Opel unit.

GM's board will be meeting to decide what the automaker will do when its government restructuring deadline arrives Monday.

Workers won't know until Monday which 14 plants GM will close in shedding 21,000 more jobs.

As things appear to be going, the U.S. Treasury -- which already has loaned GM $19.4 billion -- would get 72.5% of the new company's stock. And it would provide $30 billion in additional financing to keep the new GM operating under bankruptcy protection.

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