May 24, 2009

GM Filing For Bankruptcy

Business news:

GM Filing For Bankruptcy

General Motors Corp. (GM) is likely to take a page from Chrysler LLC's playbook in an expected bankruptcy filing that tests a legal strategy for a quick restructuring with heavy government backing, analysts said.

GM, which faces a June 1 deadline from the U.S. government to come up with a viability plan or face a cutoff of aid, is widely expected to follow rival Chrysler into filing for bankruptcy and use a similar plan to emerge leaner and more competitive.

Yet the two companies could still face legal hurdles and loud objections from the financial sector in a test for the plan by President Barack Obama's administration to save the two automakers critical to the U.S. economy, analysts say.

"I think GM will learn a lot from the Chrysler file for bankruptcy," said one bankruptcy attorney, who asked to remain anonymous, but is familiar with the Chrysler case and represents auto industry clients.

"I would expect GM to file in the same court. The fast track was adopted by the bankruptcy court and it is key to GM as it was for Chrysler."

GM, which is widely expected to seek court protection even while it scrambles to win cost savings, would represent a much larger bankruptcy case with thousands of investors and other parties, but both firms are trying to shed debt and legacy costs including for vast numbers of retirees.

GM Filing For Bankruptcy

Posted at May 24, 2009 4:24 PM

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