Reuters reports that GM may file for bankruptcy and then form a new company after liquidating the undersirable assets. GM and Chrysler have to file restructuring plans with the government by Tuesday. The auto manufacturing giants may also ask for additional bailout funds.
"One plan includes a Chapter 11 filing that would assemble all of GM's viable assets, including some U.S. brands and international operations, into a new company," the newspaper said. "The undesirable assets would be liquidated or sold under protection of a bankruptcy court. Contracts with bondholders, unions, dealers and suppliers would also be reworked."
Citing "people familiar with the matter," the story said that GM could also ask for additional government funds to stave off a bankruptcy filing.
GM declined to comment, the story said.
General Motors and Chrysler LLC face a Tuesday deadline to file restructuring plans to the government in exchange for receiving $17.4 billion in federal loans.
Automakers have struggled as U.S. auto sales have tumbled amid a recessionary economy. U.S. auto sales in January tumbled to a 27-year low.
It's not clear whether or not the bankruptcy filing would mean more layoffs. GM already recently announced plans to cut 10,000 more jobs worldwide. An article in the Detroit News says bondholders have been squeezing GM and demanding 50 cents on the dollar.
Reuters 
