General Motors bondholders are readying legal action against the carmaker’s bankruptcy plan, a media report said.
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The Wall Street Journal said bondholders were worried the process would push them to accept hefty losses on their investments. Members of an ad hoc committee representing the bondholders had made their concerns known to the task force, it added.
The lead lawyer representing the committee declined to comment to Reuters on the matter.
Other recent reports have said the Obama administration, via the US treasury and the president’s autos task force, plans to put the troubled firm through a fast-track, structured bankruptcy that would see it divided up into new ‘good’ and ‘old’ units, the latter containing the less profitable brands and crippling liabilities such as pension and healthcare obligations, for subsequent restructuring, possibly during a more drawn-out bankruptcy process.
That plan was seen as the most sensible configuration, a source familiar with GM’s plans told Reuters last week.
The news agency also noted that ratings agency Standard & Poor’s last week cut certain debt ratings of GM and Chrysler Holding, citing lower likelihood of recovery by their debtors in the event either carmaker defaults on the loans or files for bankruptcy.
