GM making back-up bankruptcy plan
TEXT OF INTERVIEW
Steve Chiotakis: General Motors is running on four flat tires and a check engine light. But it is still running. And the Obama administration is insisting on a full-on repair job. Published reports say the U.S. Treasury wants GM to get its paperwork in order in the coming weeks for a possible bankruptcy filing.
Marketplace’s Dan Grech joins us right now. So Dan, here we are with yet another timetable?
Dan Grech: Yeah, that’s right — GM has been given until June 1, according to The New York Times, to come up with a bankruptcy plan. Basically they’re looking at a surgical bankruptcy — you would take the good assets from GM and you would spin those off into a new company, and with the help of $5 [billion] to $7 billion in federal financing, the new company could be back in business in a matter of weeks. And the reason why the feds are insisting that GM do this now is cause it is a huge amount of paperwork and preparation to file for Chapter 11.
Chiotakis: Yeah but Dan, isn’t GM still working on a restructuring proposal for the administration?
Grech: Yeah, that’s exactly right. This is kind of a parallel process to that other plan. Basically the feds want GM to have a bankruptcy plan in place in case the restructuring plan isn’t acceptable.
Chiotakis: So what is then GM hoping for out of all of this?
Grech: Well, GM has a new CEO, his name’s Fritz Henderson, and he insists that he can find a way for GM to survive without filing for Chapter 11. He basically needs to strike deals with bond holders and with the Autoworkers Union — those are the two groups that have held up GM’s restructuring so far. The real question, I guess, is whether or not people are still going to want to buy GM’s cars when all this stuff is up in the air.
Chiotakis: All right, Marketplace’s Dan Grech. Thank you, Dan.
Grech: Thank you, Steve.
There’s a lot happening in the world. Through it all, Marketplace is here for you.
You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible.
Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.
