The government is trying to prepare the markets for what looks like the imminent (June 1) GM Chapter 11 filing. It will be a sad day when we see the country's once proud industrial icon go into bankruptcy. There will be unexpected economic and market consequences when GM files. I'm not sure that I would want to be long stocks in early June. Sell in May and go away?-LouGM preparing for possible bankruptcy: report
LOS ANGELES (MarketWatch) -- The U.S. Treasury is directing General Motors Corp. to lay the groundwork for a bankruptcy filing by a June 1 deadline, despite GM's public contention that it could still reorganize outside court, the New York Times reported Sunday, citing unnamed people with knowledge of the plans.
Members of President Obama's automotive task force are holding ongoing meetings and conference calls with GM officials and their advisers in Detroit and Washington, the report said, with the goal to prepare for a fast "surgical" bankruptcy.
The preparations are aimed at assuring a GM bankruptcy filing is ready if the company is unable to reach agreement with bondholders to exchange roughly $28 billion in debt into equity in GM and to get needed concessions from the United Automobile Workers union, the report said.
One plan under consideration would create a new company that would buy the "good" assets of GM almost immediately after the carmaker files for bankruptcy, the newspaper reported. Less desirable assets, including unwanted brands, factories and health-care obligations, would be left in the old company, which could be liquidated over several years, it said.
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