Over the weekend, The Wall Street Journal reported that General Motors is considering Chapter 11 bankruptcy filing as an option that would create a new company. Sources familiar with the matter said that GM plans to outline the option on Tuesday when it presents its viability plan to the U.S. government.
“One plan includes a Chapter 11 filing that would assemble all of GM’s viable assets, including some U.S. brands and international operations, into a new company,” The Wall Street Journal said. “The undesirable assets would be liquidated or sold under protection of a bankruptcy court. Contracts with bondholders, unions, dealers and suppliers would also be reworked.”
Insiders say that General Motors is also considering asking the government for additional funds to keep it from going bankrupt. GM had no comment on the report.
In the mean time, GM is talking to bondholders and the UAW to reach an agreement that would wipe out about $28 billion in debt for the automaker. A deal is unlikely to be reached by Tuesday.