The Obama administration estimates that a General Motors bankruptcy would take at least 60 to 90 days and perhaps longer to complete, a senior official said last night.
The official, who spoke on the condition of anonymity because he was not authorized to discuss the matter publicly, would not confirm a specific bankruptcy scenario, but the government's deadline for any filing is on Monday.
President Barack Obama is expected to discuss the automaker's restructuring at that time, the White House said. On April 30th, Obama announced that Chrysler was seeking Chapter 11 protection.
The administration is also planning an extraordinary offensive beginning on June 2nd of sending senior officials to Midwest communities most affected by job losses and other aspects of GM and Chrysler bankruptcies.
Eight Cabinet secretaries and other top officials will visit Ohio, Michigan, Indiana and Wisconsin to discuss federal efforts to help workers.
Chrysler, GM's smaller rival, is on the verge of stepping out of court protection. GM and Chrysler are operating under the direction of a White House/Treasury Department task force, which has provided more than $36 billion in bailout assistance to the automakers and their affiliated finance companies.
The official said GM, a publicly traded company with a global footprint, is more complex than privately held Chrysler and would take longer to reorganize in court, even under the expedited strategy the government has mapped out.
“I think the 60-to-90-day time frame is a better time frame to establish than something that looks like Chrysler," the official said.
GM would be a private company for some time, under the government's restructuring road map, the official said. A GM spokesman declined comment on the scope of any bankruptcy.
The administration official also said that total new US government aid to GM, including any debtor financing in bankruptcy, would top $30 billion. The Canadian government would also offer some $9 billion.
The US government stands to own more than 70 per cent of the new company once restructuring is complete, and the United Auto Workers 20 per cent.
GM will also turn over its board, but some members are expected to stay on, the official said.
The task force also expects at least 35 per cent of GM bondholders to accept a revised debt-for-equity offer that would give bondholders 10 per cent of the reorganized company as well as warrants to buy another 15 per cent in equity. Bondholders face deadline of tomorrow to respond to the offer.
Reuters