GM won’t make debt payment, bankruptcy ‘probable’ will brag down the market badly, FAZ way to go General Motors won't make its $1 billion debt payment on June 1, and it is looking for a debt-for-equity exchange or court protection to lower its debt.
The company’s chief financial officer, Ray Young, said a trip to bankruptcy court is “probable,” the Wall Street Journal reported. GM is trying to reduce its $28 billion debt load.
Last week reports said the Treasury Department had directed GM (NYSE: GM) to lay the groundwork for a “surgical bankruptcy” that would be quick, taking just a few weeks for certain portions of the company, but a quick bankruptcy could face legal challenges from the company’s bondholders.
So far, GM has taken $13.4 billion in bailout money, and has asked for an additional $16 billion.
GM is part of a joint venture with Toyota that runs the New United Motor Manufacturing Inc. plant in Fremont. The plant employs 4,800 jobs, and according to the Silicon Valley / San Jose Business Journal, there are 15,000 people employed by 1,000 suppliers throughout the Bay Area and the state that depend on the plant.
The Associated Press reports that GM will idle most of its U.S. plants for up to nine weeks this summer because of bloated inventory and falling sales, but the report doesn't specify whether NUMMI will be affected.
Market Data 
Markets 
AI
