As we’ve been saying all along it looks for all the world that GM is heading for Chapter 11 bankruptcy that may be coming sooner rather than later.
According to very anonymous sources within GM, principles have begun “intense and earnest” preparations for a possible bankruptcy filing. The unnamed source actually spoke to CNNMoney.com and said that GM is still hoping to win concessions from creditors and unions to avoid a possible bankruptcy, but the June 1st deadline given to GM by the U.S. Treasury department has led to intense bankruptcy preparations within the company.
GM is hoping that those creditors agree to take an equity stake in the company in return for reducing debt by at least two-thirds. GM owes about $28 billion to holders of unsecured debt.
What makes little sense to this writer is that GM is spending millions on advertising for their “Total Protection” program that covers all brands in the General Motors stable except for Saab. The program is meant, in part, to instill confidence in buyers that GM is solvent. Experts all agree that if news of a possible bankruptcy were to become public knowledge sales would plummet and the problem would worsen. Read more >>
