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According to a source familiar with the matter, GM’s plans for a bankruptcy filing involves a quick sale of it’s healthy assets to a new company that will be owned by the U.S. government. The source, who will not be named since he (at least we know it’s a man) was not cleared to speak with the press, said that the new company would honor the claims of secured lenders. He said that the remaining assets of GM would stay in bankruptcy protection to honor other outstanding claims.

GM has about $6 billion in secured debt and owes $20 billion to the UAW’s retiree health care trust. The struggling automaker has been trying to get the union to forgive $10 billion of that debt.

The source said that the government would provide an extended credit line to the new company and would forgo must of the $15.4 billion it has already loaned General Motors.

We’ll get more details by June 1, so stay tuned.

- By: Kap Shah

Source: Reuters

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