A bankruptcy filing is not certain in the General Motors restructuring case and reports that the Obama administration will steer the automaker into bankruptcy as early as next week are premature, a source familiar with the situation said Friday.
The source said the deadline for GM's restructuring is May 31 and the process will go forward until then. The Chrysler case, where negotiations continued until the deadline, are a good comparison, the source said.
Earlier, the Washington Post, citing sources familiar with the discussions, reported that the Treasury Department would steer GM into bankruptcy next week under a plan that would provide the company just short of $30 billion in new federal loans, A U.S. Treasury spokeswoman declined to comment.
The Treasury is continuing to work with GM on its restructuring, and while the situation could change, there were no plans for a GM bankruptcy filing next week, the source, who was not authorized to speak publicly about the matter, told Reuters.
The government task force overseeing GM [GM 1.76 -0.16 (-8.33%) ] and Chrysler restructuring has given GM until June 1 to restructure its operations and prove it can be viable without government aid or face probable bankruptcy.
On Thursday an Obama administration official said the task force was continuing to work with GM and all of the stakeholders involved.
"I think that in terms of the outlook, I'm not going to speculate on the bankruptcy question, but I will say that the administration is committed ... to standing behind GM and is confident that the company will be able to restructure over a short period of time," the official said.
"GM faces a number of hurdles and it may well be that a court process is necessary to effectuate the restructuring, but the administration is committed to standing by the restructuring process whether or not that occurs," the official said.
GM officials could not be immediately reached for comment.
While the company has indicated a bankruptcy is probable, there has been no indication from the automaker, its advisors or the government that a filing would occur as early as next week.
GM must still address a number of concerns before any filing, including payments to suppliers, receiving ratification of proposed labor concessions and sorting out a complex proposal with its bondholders to further reduce debt.
If General Motors files for bankruptcy, its healthy assets will be quickly sold to a new company owned by the U.S. government, a source familiar with the situation told Reuters on Tuesday.
The source, who was not cleared to speak with the media and asked not to be identified, said the U.S. government would pay for the assets by assuming the automaker's $6 billion of secured debt and forgiving the bulk of the $15.4 billion of emergency loans that the U.S. Treasury has provided to GM.
The company on Thursday reached a sweeping deal on concessions with the United Auto Workers and has given its bondholders until next Tuesday to agree to a plan that would reduce the company's debt.
Sold half position @2.20 this AM Looking to rebuy at about the 1.50 area
This was a technical sale based on the move up on 4/27. That was the last rally high the stock had. Normally price will stall in that area. The 50 day average was also in that area. It is a knee jerk thing that I do in this kind of situation. Now things really get tough. Remember the Board did sell their stock so it is nitty gritty time and the stock did have a nice rally off the 1.00 area. It was an easy buy at 1.00 but now after the rally some optimism creeps into the deal and that bothers me a little. ...Mikey
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