2 hrs 59 mins ago
DETROIT (Reuters) – Shares of General Motors Corp plunged 17 percent on Monday after a report that the U.S. Treasury is directing the automaker to lay the groundwork for a bankruptcy filing by June 1.
GM, which is operating under $13.4 billion of emergency government loans, has until June 1 to win sweeping concessions from bondholders and the United Auto Workers union. The Obama administration has warned that the alternative would be bankruptcy.
The New York Times said the government's goal was to prepare for a fast "surgical" bankruptcy, quoting people who had been briefed on the GM plans.
Sources familiar with the situation had told Reuters that GM was in "intense" and "earnest" preparations for a possible bankruptcy filing.
JPMorgan analyst Himanshu Patel said that deep balance sheet restructurings asked for by the U.S. Treasury would be a tough spill to swallow for bondholders and the UAW union, making bankruptcy more likely.
Shares of GM were down 17 percent, or 36 cents, to $1.66 on the New York Stock Exchange.
What is a 'surgical bankruptcy'? Are we going to make sure the UAW gets covered while everyone else gets the finger? If they kill GM, and maintain any union benefits on the taxpayers bill, I will see to it that nobody in my family ever buys an American auto again.