GM making back-up bankruptcy plan
On top of restructuring, the U.S. Treasury wants General Motors to get its paperwork in order for a bankruptcy plan. Marketplace's Dan Grech explains to Steve Chiotakis what GM is hoping for out of this parallel process.
New General Motors CEO Fritz Henderson (Bill Pugliano/Getty Images)
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TEXT OF INTERVIEW
Steve Chiotakis: General Motors is running on four flat tires and a check engine light. But it is still running. And the Obama administration is insisting on a full-on repair job. Published reports say the U.S. Treasury wants GM to get its paperwork in order in the coming weeks for a possible bankruptcy filing.
Marketplace's Dan Grech joins us right now. So Dan, here we are with yet another timetable?
Dan Grech: Yeah, that's right -- GM has been given until June 1, according to The New York Times, to come up with a bankruptcy plan. Basically they're looking at a surgical bankruptcy -- you would take the good assets from GM and you would spin those off into a new company, and with the help of $5 [billion] to $7 billion in federal financing, the new company could be back in business in a matter of weeks. And the reason why the feds are insisting that GM do this now is cause it is a huge amount of paperwork and preparation to file for Chapter 11.
Chiotakis: Yeah but Dan, isn't GM still working on a restructuring proposal for the administration?
Grech: Yeah, that's exactly right. This is kind of a parallel process to that other plan. Basically the feds want GM to have a bankruptcy plan in place in case the restructuring plan isn't acceptable.
Chiotakis: So what is then GM hoping for out of all of this?
Grech: Well, GM has a new CEO, his name's Fritz Henderson, and he insists that he can find a way for GM to survive without filing for Chapter 11. He basically needs to strike deals with bond holders and with the Autoworkers Union -- those are the two groups that have held up GM's restructuring so far. The real question, I guess, is whether or not people are still going to want to buy GM's cars when all this stuff is up in the air.
Chiotakis: All right, Marketplace's Dan Grech. Thank you, Dan.
Grech: Thank you, Steve.
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