| | GM, Chrysler considering bankruptcy: report
 It could be the end of the line for General Motors shareholders. The company that once produced more than half of the cars on US roads is considering filing for bankruptcy in exchange for access to bailout funds.
Bloomberg News reported late last month that the incoming Obama administration was discussing a "prepackaged" bankruptcy filing for the automakers. Bankruptcy would allow the company to come up with a plan for restructuring and prevent the firm from running out of cash to pay creditors until a plan is in place.
Today, the wire reported that both General Motors and Chrysler are considering filing for Chapter 11.
General Motors Corp. and Chrysler LLC executives are considering accepting a pre-arranged bankruptcy as the last-resort price of getting a multibillion-dollar government bailout, said a person familiar with their internal discussions.
Auto executives have warned bankruptcy would lead to liquidation as customers abandoned the companies. Staff for three members of Congress have asked restructuring experts if a pre-arranged bankruptcy -- negotiated with workers, creditors and lenders -- could be used to reorganize the industry without liquidation, a person familiar with that matter said.
“It’s essential for Congress to do due diligence on bankruptcy as an option so it gets a clear sense from independent people what the risks and possibilities are,” said Alan Gover of White & Case, who has been lead lawyer in $60 billion of corporate-debt restructurings...
Negotiations are splintered among small groups, making it unlikely a proposed solution such as bankruptcy would emerge until next week at the earliest, the person said.
General Motors shares traded in Germany fell 1.4 percent to the equivalent of $4.83 as of 11:03 a.m. The stock has plunged 80 percent this year in New York Stock Exchange composite trading.
GM CEO Rick Wagoner has said that filing for bankruptcy would essentially mean liquidation for the company, because customers would fear buying cars from a company that might not be able to protect warranties.
"Bankruptcy might also help automakers to get rid of some health and labor costs that burden them, they said," Bloomberg added dryly.
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