The Obama administration has estimated that a General Motors bankruptcy would take at least 60 to 90 days and perhaps longer to complete and is also planning an extraordinary offensive beginning on 2 June of sending senior officials to Midwest communities most affected by job losses and other aspects of GM and Chrysler bankruptcies.
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Eight Cabinet secretaries and other top officials will visit Ohio, Michigan, Indiana and Wisconsin to discuss federal efforts to help workers, Reuters reported.
An anonymous official told the news agency GM, a publicly traded company with a global footprint, is more complex than privately held Chrysler and would take longer to reorganise in court, even under the expedited strategy the government has mapped out.
“I think the 60-to-90-day time frame is a better time frame to establish than something that looks like Chrysler,” the official said.
GM would be a private company for some time, under the government’s restructuring road map, the official said.
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By GlobalDataThe administration official also said that total new US government aid to GM, including any debtor financing in bankruptcy, would top US$30bn. The Canadian government would also offer some $9bn.
The US government stands to own more than 70% of the new company once restructuring is complete, and the United Auto Workers 20%.
GM will also turn over its board, but some members are expected to stay on, the official told Reuters.
The task force also expects at least 35% of GM bondholders to accept a revised debt-for-equity offer that would give bondholders 10% of the reorganised company as well as warrants to buy another 15% in equity. Bondholders face a Saturday deadline to respond to the offer.
The official declined to set an acceptance rate the automaker would be comfortable presenting to a bankruptcy judge to speed its restructuring. Success of the offer, the official said, would be a judgment call.
On efforts to find a buyer for GM’s European unit, Opel, the official told Reuters the US government would continue to participate in discussions “as necessary and appropriate” but the matter was mainly between GM and the German government.
The official also noted GM could enter bankruptcy with or without an Opel sale agreement in place.
