Restructuring plans submitted to the federal government by General Motors and Chrysler in their bids to secure more bailout loans failed to show how they could be viable, the auto industry task force said on Monday.


It said GM would receive 60 days of additional working capital to resolve the situation and Chrysler, about 80% controlled by private equity firm Cerberus Capital Management , would have 30 days to complete an alliance with Fiat .


The task force said an expedited bankruptcy process to help GM and Chrysler eliminate unsustainable debt loads may be the best path if out-of-court restructurings with creditors cannot be negotiated, Reuters reported.


The government also said it would launch a plan to guarantee the warranty coverage of consumers who purchase new GM and Chrysler vehicles during the next phase of their restructuring.


The task force decided GM’s plan would not provide viability over the long term even if the economy improved but said the automaker – whose CEO Rick Wagoner it requested step down – could be made viable with more restructuring. Hence the additional 60 days of working capital to develop a more aggressive restructuring plan and “credible strategy” to complete it.


The plan will include “an increased effort by the U.S. treasury and outside advisers to assist with the company’s restructuring effort,” according to the task force.


GM must substantially reduce its debt and existing liabilities and will require substantially greater balance sheet concessions than for its existing loans.


The automaker must reach full competitiveness with the US operations of foreign automakers rapidly and make a more aggressive restructuring of manufacturing, headcount, brand, nameplate and retail sales networks.


The task force also noted that GM was “at least one generation behind Toyota on advanced, ‘green’ powertrain development,” and its answer, the Chevy Volt, was projected to be much more expensive, according to AFP.


The task force said Chrysler simply could not be viable over the long term as a stand-alone company and its plan contained a number of “unrealistic or overly optimistic” assumptions.


It said an alliance with Fiat could provide a path to viability, but the original proposal was unacceptable in many ways, including the potential for Fiat to hold a majority of the company before US taxpayers were paid back, according to Reuters.


Chrysler will get 30 days of working capital to complete a definitive agreement with Fiat and secure the support of necessary stakeholders. The government would consider an additional $6bn of loans to Chrysler if the partnership with Fiat was completed.


However, Chrysler must extinguish the vast majority of its secured debt as well as all of its unsecured debt and equity, other than trade creditors providing normal trade terms.


Chrysler, Fiat and the United Auto Workers union must reach agreements that provide greater concessions than outlined for the existing loans.


Chrysler and Fiat must provide a more detailed operating plan and the alliance must not require more than the $6bn of additional loans that could be provided.