CarBuyersNoteBook

According to a recent article in The Wall Street Journal, automaker General Motors is considering filing Chapter 11 bankruptcy. Under this plan, which is only one option out of several that GM plans to present to the U.S. government this week, GM would take some of its assets and reorganize them into a separate company in order to remain viable for the long term. “One plan includes a Chapter 11 filing that would assemble all of GM’s viable assets, including some U.S. brands and international operations, into a new company,” the newspaper said. “The undesirable assets would be liquidated or sold under protection of a bankruptcy court. Contracts with bondholders, unions, dealers and suppliers would also be reworked.”

GM has already received an addition $4 billion in loans in advance of its required meeting with the government. Part of the option for filing bankruptcy is a request for additional government money to make bankruptcy unnecessary. A Chapter 11 bankruptcy filing would erase about $28 billion in GM debt. GM has cut labor costs over the past year by approximately $1 billion.

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