Tuesday, April 7, 2009

GM Planning for Bankruptcy



By Craig Rozelle


GM has started to accelerate preparations to file for bankruptcy, according to multiple sources preparations have become “intense and earnest”. GM still hopes to win concessions from creditors and unions to avoid having to file for bankruptcy. But the June 1 deadline that president Obama and the treasury Department to reach deals by or go into bankruptcy has caused preparations to quicken. GM would be the largest company ever to go bankrupt if they indeed file for bankruptcy. GM owes about 28 billion dollars to creditors. They want these creditors to take an equity stake in the company in return for shrinking the debt by about two thirds. The government forced GM Chairman and CEO Rick Wagoner to resign last week. New GM CEO Fritz Henderson said at his first press conference last week that he would not have taken the job as CEO if he wasn't willing to take the company through the bankruptcy process, although he said he still preferred to reorganize the company outside of bankruptcy court if at all possible. Shares of GM stock dropped more than 10 percent Tuesday on news that GM was preparing to declare for bankruptcy. The shares have already dropped 40 percent since Obama

brought up the fact that GM may have to declare for bankruptcy.


Sources:



No comments:

Post a Comment