The US government Treasury Department told struggling carmaker General Motors, operating under emergency US government loans, to ready itself for a possible bankruptcy filing by June 1.
Members of President Barack Obama’s automotive task force had issued the instructions to General Motors .
The task force spent last week in meetings and on conference calls with GM in Detroit. The talks are expected to continue this week.
Unofficial sources said the goal is to prepare GM for a fast “surgical” bankruptcy.
The preparations are aimed at ensuring a GM bankruptcy filing is ready should the company be unable to reach agreement with bondholders to exchange roughly $28 billion in debt into equity in GM.
The task force has given GM the two-month deadline to come up with a restructuring plan and to cut costs and reduce its debts in order to continue to receive aid.
The automaker has been already granted $13.4 billion in federal aid, and its managers are insisting that the company’s image should not be damaged.
The new plan comes as GM officials say the company can restructure its business on its own. GM has been granted 13.4 billion dollars in federal aid to avoid collapse.
Two weeks ago GM former chief Rick Wagoner resigned under the pressure of the White House, after more than eight years of running the largest US automaker.
Chrysler LLC also has accepted billions in government bailout funds, but Ford Motor Co. is the only one of the Big Three automakers from Detroit not to take federal funds.
The New York Times , citing people who had been briefed on the plans, reports the goal is to prepare for a fast “surgical” bankruptcy. GM insists a quick restructuring is necessary so its image and sales aren’t damaged permanently.
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