GM and Chrysler consider pre-arranged bankruptcy to get bailout

It seems that GM and Chrysler are considering accepting a pre-arranged bankruptcy as an option of getting their hands on the $25 billion government bailout fund. According to Bloomberg, three members of Congress have asked restructuring experts if pre-arranged bankruptcy without liquidation could be used to reorganize the sector.

Industry executives and experts said that any sign of bankruptcy of the Detroit Big 3 would spread throughout other automakers in the auto industry causing a ripple affect.

The Big 3 have altogether asked Congress to authorize $34 billion in loans and credit lines to restructure their companies. The White House has made no comment on the $34 billion figure and said that it was too early to say how it will support the Big 3 on an emergency basis.

Source: Reuters