U.S. to steer GM toward bankruptcy

[rickaren]

U.S. to steer GM toward bankruptcy

Posted Friday, May 22, 2009, 1:12 pm in Employee News

The Obama administration is preparing to send General Motors into bankruptcy as early as the end of next week under a plan that would give the automaker tens of billions of dollars more in public financing as the company seeks to shrink and re-emerge as a global competitor, sources familiar with the discussions told the Washington Post.

The move comes as the administration prepares to lift Chrysler from bankruptcy protection as soon as next week, industry sources told the paper. The shifts into and out of bankruptcy are landmarks in the Obama administration’s attempt to broker a historic restructuring of the American auto industry in the space of months, the Post reported.

The legal tactic is viewed by some as the best means of reviving the companies, the paper said. But the speed of the government-led transformation has triggered complaints that the rights of investors and dealers are being trampled. Under the GM draft bankruptcy plan, the company would receive just short of $30 billion in additional federal loans, a source told the paper. (Washington Post)