Detroit The speed at which General Motors Corp. exits bankruptcy protection will depend a lot on the shape the company is in when it enters. GM has three more days to tidy up.
Bankruptcy experts say the more operational, labor and financial concessions the automaker gets lined up in advance of its likely Chapter 11 reorganization, the faster the ailing automaker can emerge a leaner, stronger company — one that will be nearly three-quarters-owned by taxpayers.
More pieces started coming together Thursday after a bloc of GM’s biggest bondholders agreed to the Treasury Department’s sweetened deal to wipe out $27 billion of the automaker’s unsecured debt in exchange for company stock.
Workers across the country won’t know until Monday which 14 plants GM will close, shedding 21,000 more jobs, but an announcement on the fate of GM’s Hummer brand is expected today, when talks are scheduled to resume in Germany about the future of GM’s European Opel unit.
GM’s union employees also finish voting today on whether to ratify a modified contract that would cut some of their benefits but slash the automaker’s labor costs.
And GM’s board of directors will begin two days of meetings to decide what the automaker will do when its government restructuring deadline arrives Monday.
A person familiar with GM’s plans said it was “probable” that the company would file for Chapter 11 bankruptcy protection Monday. The person did not want to be identified because the plans were still under discussion with the U.S. and Canadian governments.
GM’s new road map, outlined in a regulatory filing Thursday, would briefly send the automaker into bankruptcy protection, erase most of its debt and eventually have it emerge leaner and stronger.
A senior Obama administration official estimated that GM would be under bankruptcy protection for 60 to 90 days, longer than Chrysler’s expected reorganization because GM is bigger and more complex. The official spoke on condition of anonymity because of the sensitivity of the negotiations.
The U.S. Treasury, which already has loaned GM $19.4 billion, would get 72.5 percent of the new company’s stock and provide $30 billion in additional financing to keep the new GM operating under bankruptcy protection.
Canada’s government is expected to provide an additional $9 billion, the administration official said.
A United Auto Workers trust that will take over retiree health care expenses will get 17.5 percent, and the old GM, effectively owned by the bondholders, would get a 10 percent stake.
GM’s existing shareholders will probably lose everything.
“It’s fair to say that there would be little to no recovery,” the official said.
The proposal is similar to what has happened to Chrysler, already under Chapter 11 protection.