International BusinessGM bankruptcy likely next week: Report
The US government is preparing to steer General Motors into bankruptcy as early as the end of next week, a plan which would provide billions of dollars more in federal funds to the ailing auto maker, says a media report.
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"The Obama administration is preparing to send General Motors into bankruptcy as early as the end of next week under a plan that would give the automaker tens of billions of dollars more in public financing as the company seeks to shrink and reemerge as a global competitor," The Washington Post reported today quoting sources familiar with the discussions.
According to the daily, the move comes as the government is getting ready to lift another auto maker Chrysler from bankruptcy protection "as soon as next week".
"The shifts into and out of bankruptcy are landmarks in the Obama administration"s attempt to broker a historic restructuring of the American auto industry in the space of months," the report published online noted.
Attributing to a source, The Washington Post said under the GM draft bankruptcy plan, the company would receive just short of USD 30 billion in additional federal loans.
The publication noted that the figure is a starting point in negotiations between the government and the company and could change.
"A cash injection that large would boost the US investment in GM to nearly USD 45 billion. The timing of the filing is also fluid, and could happen the first week of June," it added.
The Washington Post said the US previously indicated that it planned to take at least 50 per cent of the restructured company, and likely would take the right to name members to its board of directors.
In Chrysler, the government would control four of nine board seats.
GM has been severely hit by the ongoing financial turmoil, which has resulted in steep decline in sales and plunging profits.