In all likelihood, June 1st will be the day that GM’s American branch officially files for protection under Chapter 11 of the United States Bankruptcy Code -- at least based on top analysis conducted over the past few days and the latest proposal by the Obama administration to GM executives.
According to information made available, the U.S. government has reportedly agreed to inject an additional $30 billion in the agonizing manufacturer, including $8 billion to be repaid directly. This would allow GM’s bond debt of $27 billion to be exchanged for stock… and the government would own a 72.5-percent total share in the company.
Despite all these financial contributions, GM still looks headed toward bankruptcy as early as next week. Following the rather successful Chrysler experiment up to this point, the number one automaker in North America could carry out its global restructuring plan which bondholders and creditors could approve in light of the latest offers.
Some of them have already OK’ed the new proposal, allowing them to recoup 10 percent of the company’s stock. However, said proposal also includes options for a 15-percent share in the "new" GM following the completion of the restructuring.
Creditors have until 5 p.m. on May 31st to submit their approval -- only hours before GM officially files for bankruptcy.
The proposal is said to have no impact on Canadian operations, meaning GM Canada won’t go bankrupt (just like Chrysler Canada). Several billion dollars will have to be loaned to GM, however, to complete its plan.
photo:General Motors
According to information made available, the U.S. government has reportedly agreed to inject an additional $30 billion in the agonizing manufacturer, including $8 billion to be repaid directly. This would allow GM’s bond debt of $27 billion to be exchanged for stock… and the government would own a 72.5-percent total share in the company.
Despite all these financial contributions, GM still looks headed toward bankruptcy as early as next week. Following the rather successful Chrysler experiment up to this point, the number one automaker in North America could carry out its global restructuring plan which bondholders and creditors could approve in light of the latest offers.
Some of them have already OK’ed the new proposal, allowing them to recoup 10 percent of the company’s stock. However, said proposal also includes options for a 15-percent share in the "new" GM following the completion of the restructuring.
Creditors have until 5 p.m. on May 31st to submit their approval -- only hours before GM officially files for bankruptcy.
The proposal is said to have no impact on Canadian operations, meaning GM Canada won’t go bankrupt (just like Chrysler Canada). Several billion dollars will have to be loaned to GM, however, to complete its plan.
photo:General Motors