The U.S. Treasury Department is directing General Motors (GM) to lay the groundwork for a bankruptcy filing by June 1, despite automaker’s contention that it could still reorganize outside of court, The New York Times reported on Sunday.
Quoting sources with knowledge on the GM plans, the Times said the goal was to prepare for a “fast surgical” bankruptcy.
From The NYT: The preparations are aimed at assuring a G.M. bankruptcy filing is ready should the company be unable to reach agreement with bondholders to exchange roughly $28 billion in debt into equity in G.M. and with the United Automobile Workers union, which has balked at granting concessions without sacrifices from bondholders.
A plan under consideration would create a new company that would buy the “good” assets of GM after the carmaker files for bankruptcy while less desirable assets, including unwanted brands, factories and health care obligations, would be left in the old company, which could be liquidated over several years, the Times said.
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