We can’t say it was inevitable, can we?
The biggest automaker is moving closer to filing for bankruptcy after its creditors rejected offers of a 10% stake in the newly restructured GM in lieu of forgiving 24 out of the $27 billion in loans they currently have with the automaker. With 90% required approval from bondholders, those who earlier handed in their bonds apparently did not suffice to save GM from filing for bankruptcy.
Some thought a labor deal GM struck last week with the UAW was a signal the company may sweeten its offer to bondholders because it gave the union less equity than initially proposed…
Fritz Henderson, the firm’s current CEO said previously that without agreement from bondholders, it is almost a certainty that GM will be heading for bankruptcy.
Two interesting tidbits:
- UAW is being offered a bigger stake; and
- From WSJ: GM and Treasury officials, encouraged by Chrysler’s progress in court over the past few weeks, believe that GM could emerge from bankruptcy in as little as 30 days.
I’m not sure how the company, much bigger than Chrysler who is believed to go through bankruptcy for at least 60 days, can finish it within 30.