In a regulatory filing to the Treasury Department Yesterday, General Motors admitted for the first time to Obama's Auto Task Force that it is seriously considering Chapter 11 bankruptcy protection. The filing stated Chapter 11 would be considered if GM cannot successfully complete an out-of-court restructuring.
Within the filing was a progress report that stayed on-message with GM's consistent claims that an out-of-court restructuring is preferable and holds the "highest value outcome" for both its customers and the U.S. economy.
GM said its decisions were helped by the government's recent pledge to back vehicle warranties and not allow bankruptcy court proceedings to drag out interminably. The company's February 17 plan was criticized as insufficient; President Obama warned that GM would have to take swift action to reduce its swollen $63 billion debt in order to avoid bankruptcy protection.
GM's new CEO Fritz Henderson conceded that bankruptcy is looking more and more possible unless his company can come to agreements with bondholders and the UAW, neither of which have been eager to make concessions.
[source: New York Times]