GM and the U.S. Treasury Department have reached a deal with the United Auto Workers, one of the key hurdles that GM needs to clear before its June 1 deadline to avoid bankruptcy. The UAW has not disclosed any information on the agreement, which still needs to be ratified before it can take effect.
It is said that the deal will be similar to one that the UAW accepted with Ford and Chrysler. GM also declined to share details about the agreement. Nonetheless, what we know so far is that GM has proposed a restructuring plan that would give the UAW a 38 percent stock in the company while the U.S. Treasury holds a majority stake.
Analysts say that even if the new agreement is ratified, it may not be enough to keep GM out of bankruptcy court. GM is still trying to get creditors, that hold $27 billion of its bonds, to accept a debt-for-stock swap.
CEO Fritz Henderson has previously said that it may be difficult to reach an agreement with bondholders, making bankruptcy “probable.”
– By: Omar Rana