Feds Work with GM as Bankruptcy Option Looms
WASHINGTON – With the deadline for General Motors to reach agreements with stakeholders or face being forced into bankruptcy quickly approaching, President Obama will dispatch eight cabinet secretaries and other top administration officials across the country next week to discuss the federal response to the auto-industry crisis, according to CNNMoney.com.
The presidential administration's auto task force backed a new deal May 28, which lenders have until 5 p.m. May 30 to accept. The deal already had received support from key lenders, GM said, reported CNN. Obama will deliver remarks June 1.
"The U.S. Treasury proposal...provides incentives for GM's unsecured bondholders to support GM's restructuring efforts in the event GM decides to pursue...a bankruptcy proceeding. Implementation of this proposal would result in a 'New GM' with a healthy balance sheet, putting the new company on a clear path toward long-term viability and success," according to a statement released by the automaker.
In the event the company does file for bankruptcy, GM hopes to exit the process quickly because consumers will be reluctant to buy vehicles from an automaker under court protection, said Vice Chairman Bob Lutz, reported Bloomberg.
United Auto Worker-represented employees have ratified the modifications to the GM-UAW 2007 National Labor Agreement, which covers approximately 54,000 hourly employees located in 46 U.S. facilities, according a statement from GM. The deal will allow the automaker to cut costs and "eliminate the wage and benefit gap" with competitors.
The automaker has reportedly alerted partsmakers to pending factory shutdowns, according to Bloomberg.
General Motors Corp. was founded in 1908 and manufactures cars and trucks in 34 countries today. With its global headquarters in Detroit, GM employs 235,000 people worldwide.