GM Bankruptcy By June 2009?

April 16th, 2009 by Reed Allmand

According to an article in the Dallas Morning News, there are rumors that GM is preparing to filing bankruptcy as early as June of this year.

The article said:
The goal is to prepare for a fast, “surgical” bankruptcy, the people who had been briefed on the plans said. GM, which has been granted $13.4 billion in federal aid, insists that a quick restructuring is necessary so its image and sales are not damaged permanently. The preparations are aimed at assuring a GM bankruptcy filing is ready should the company be unable to reach agreement with bondholders to exchange roughly $28 billion in debt into equity in GM and with the United Automobile Workers union, which has balked at granting concessions without bondholder sacrifices.

If GM files bankruptcy, it’s rumored that they will create a new company which will buy the “good” assets and liquidate the old company in bankruptcy, discharging toxic assets and liabilities such as healthcare obligations. One thing’s for sure, a GM bankruptcy will send shockwaves through the economy, if in fact these rumors materialize. Thousands of Americans depend on GM for income and with little savings, the threat of job losses could create a state of panic for workers who work for the giant automaker. If or when job losses are implemented after a GM bankruptcy we can expect to see a surge in personal bankruptcies and foreclosures amongst those who depend on the automaker for their livelihood. A GM bankruptcy may also jeopardize the automaker’s existing pension plan which could affect thousands of retirees. What we need now is a contingency plan that will protect GM workers and retirees in the case of a GM bankruptcy.

About Reed Allmand

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Allmand's vision is rooted in his own financially precarious childhood in Abilene "My father always had difficulty holding a job and supporting our family, so after my parents divorced when I was 12, my sister and I got jobs to help make ends meet," he recalls. "I remember what it felt like as a child to worry that our car would be repossessed or home foreclosed on."

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