General Motors last night finalised a pre-packaged bankruptcy that would give the US government up to 72.5% and improved the offer to bondholders.
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GM said in a regulatory filing that the US Treasury had agreed to the plan to create a new company that bought its assets, Agence France-Presse (AFP) reported.
Significantly, a group of bondholders who had rejected an earlier proposal agreed to the new plan, GM said.
But another group representing many small bondholders rejected the new proposal and said it would challenge the case in court.
Main Street Bondholders said the plan remained unfair to investors, who would get just 13 cents on the dollar compared with 66 cents for claims from GM’s main union, the United Auto Workers.
“The US government appears to overtly favor the UAW members over America’s seniors and retirees,” a spokesman told AFP.
The US government could provide “in excess of US$50bn” to this reorganisation that would be converted mainly to stock, according to GM’s filing with the Securities and Exchange Commission.
A senior US administration official said this would include new cash of some $39bn from the US and Canadian governments, which would be on top of the $20bn already injected into GM by Washington.
The official said a GM bankruptcy might take somewhat longer than for Chrysler, which is seeking to emerge soon after filing for bankruptcy protection 30 April.
“A 60- to 90-day timeframe is a better” estimate, the official told AFP.
