Bankruptcy funding being sought for GM and Chrysler

Outside advisers to the U.S. Treasury have started lining up what is said to be the largest bankruptcy loan ever. According to a report by the Wall Street Journal, the advisers are looking to banks and other lenders for at least $40 billion in financing for GM and Chrysler.

The administration officials and the auto task force said that they are trying to find a way to save the two companies without repsorting to bankruptcy. They said that the latest efforts were just “due diligence” on part of the advisers to the U.S. treasury and that bankruptcy financing may not be necessary.

Nonetheless, sources familiar with the matter said that Obama’s administration believes that Chapter 11 filings by GM and Chrysler should be seriously considered.

A person involved with the matter told the Wall Street Journal that “everything is on the table right now.” The person said that Obama doesn’t want to see huge job losses in the auto industry.

It is reported that the advisers are also looking for ways that the Treasury could “prime” other banks making DIP loans so the government could be paid back before others.

Source: WSJ