Could GM See a Profit As Well As An IPO in 2010?

Seems unlikely, although the scenario in the title line could happen. How does a bankrupt company that was once publicly traded, then gets bailed out by the government, then emerges from bankruptcy now find itself poised for IPO? Only in America, it would seem.

From Automotive News:

General Motors, Co., has a "reasonable chance" to show a profit in 2010 after five years of losses and could sell shares by late this year though it has no timetable for an IPO that would reduce the U.S. government's majority stake, CFO Chris Liddell said.

Liddell, speaking to reporters for the first time in his new role after joining GM from Microsoft Corp., said the automaker would not rush into an initial public offering.

"Even in the few months I've been here, I've been encouraged by the progress we've made, but when it will all come together is impossible to say," Liddell said of the timing for GM to return as a listed company.

GM received $50 billion of government financing to restructure in a bankruptcy steered by the U.S. Treasury, which owns almost 61 percent of the automaker.

Liddell said GM's restructuring has given it a shot at success by cutting costs and debt as it emerged from bankruptcy in July.

"The preconditions for success are extremely good -- although maybe not so obvious to people when they look from the outside," Liddell said.

He added: "I think we have a reasonable chance of being profitable this year. Relative to where we were a few years ago, that's enormous progress."

Turnaround temptation

GM has lost a combined $88 billion since last posting an annual profit in 2004. Liddell said the opportunity to be part of a turnaround at the automaker was part of the attraction as he weighed three other offers to leave Microsoft late last year.

"People say, 'why would you leave this incredibly comfortable existence?'" he said.

"I had got to the stage at Microsoft where, after five years, I felt I had made all the difference I could and was reaching the point of diminishing returns."

Liddell, who took a month off after leaving Microsoft, said the three other offers were with technology companies. He turned them down to join GM.

"I like to joke that this was the hardest job, this was the least amount of pay, this was the toughest situation I was looking at," he said. "But other than that, it was an entirely rational decision."

"If I can be part of a team that helps the turnaround at GM, that's something I can be proud of in 10 or 20 years," he said

Liddell, 51, a New Zealand native, is being paid a salary of $750,000 with $5.45 million in restricted stock and salary stock grants at GM.

His salary exceeds the cap of $500,000 imposed on firms that have taken the U.S. government bailout but an exception was approved for his hiring by Kenneth Feinberg, the U.S. Treasury's special master on pay.

Higher heights?

Liddell is considered a leading candidate to replace GM CEO Ed Whitacre, 68. The CFO was first recruited by Whitacre's predecessor, Fritz Henderson, in September.

He declined to discuss GM's succession plans on Wednesday, saying that it was "way too early" to consider just seven weeks into his term at the automaker.

GM's financial operations were sharply criticized in its slide toward bankruptcy.

Steve Rattner, the former investment banker who headed the Obama administration's autos task force, said the automaker was saddled with "perhaps the weakest finance operation" U.S. officials had seen at a major company.

But Liddell said the GM financial management team was not "as bad as characterized."

"These situations are never as good or as bad as they look from the outside," he said, adding that he had replaced seven of the 11 managers who had reported to him at Microsoft over five years.

"No one really noticed there because the cash flow was coming in every day," he said.

Liddell, who used to drive a Ferrari to commute to Microsoft's campus near Seattle, said he was working his way through a rotation of GM vehicles, starting with the Cadillac Escalade.

"I want to drive everything. I don't want to drive just the top-of-the-line cars," he said. "They're slowly but surely moving me through the whole fleet."

Read more: http://www.autonews.com/apps/pbcs.dll/article?AID=/20100317/OEM/100319909/1178#ixzz0iWzwaJcS

Rick Wagoner, Former GM CEO, Gets Retirement Benefits Totaling $8.6 Million

Mug Shot of Rick Wagoner





Ready to become upset? Rick Wagoner, the former CEO of GM who helped drive GM into the ground has negotiated a retirement package of $8.6 million. Talk about hitting the lottery. Only in the US can a retiree come away from a bankrupt company with so much money. Let's be clear, this money is coming directly from the taxpayers, in the form of the $30 billion in bail out funds.

Think about it, when a company goes bankrupt, can its retired employees still receive a pension? Of course not. How maddening it is to see Wagoner be rewarded for his incompetent leadership.

From Automotive News:

Former General Motors CEO Rick Wagoner, ousted in March by the Obama administration, will retire in August with a package worth $8.6 million in the first five years.

Wagoner's retirement will take effect on August 1, and he will draw sharply reduced benefits after GM's federally financed bankruptcy, the company said on Tuesday.

The value of Wagoner's retirement package is about 60 percent lower than it would have been at the end of last year, before the largest U.S. automaker fell into a government-funded bankruptcy and its assets were sold to a new GM, federal regulatory filings show.

The former top GM executive reached a retirement agreement with the old GM, now renamed Motors Liquidation Co., on July 8 and will retire officially from the new GM taking benefit cuts consistent with other retirees, the company said in a filing with the U.S. Securities and Exchange Commission.

Over the first five years of retirement, Wagoner will be paid almost $8.6 million, down from the nearly $23 million he was entitled to receive at the end of last year.

Based on 32 years service to GM, Wagoner is entitled to an annual $74,030 under the salaried retirement program and five installments of about $1.64 million under the executive retirement plan.

Wagoner had been entitled to five payments of more than $4.5 million each as of the end of 2008 under GM's executive plan and $68,900 per year under the salaried program, according to the last GM annual report.

Wagoner will continue to receive personal liability insurance until January 1. He also will receive an existing life insurance policy or its cash value, currently nearly $2.6 million.

GM emerged from bankruptcy protection last week as a sharply smaller automaker and with the U.S. Treasury as its majority shareholder after taking in $60 billion in government funding from the U.S. and Canada.

Before his ouster by the White House-appointed autos task force, Wagoner had argued that bankruptcy would be a more costly alternative to an expanded version of the bailout that began in the final days of the Bush administration.

Wagoner was forced out as CEO in March, but nominally remained on the automaker's payroll at the $1 a year salary he had agreed to take until retirement terms could be set.

GM Exits Bankruptcy, Promising "An End to Business As Usual"

Fritz Henderson, CEO of GM, held a news conference at 9:00 AM EST, and outlined the "new" GM. A massive number of white collar jobs will be eliminated and Henderson declared an end to the business as usual paradigm. We shall see whether or not GM is to be believed.

From The Wall Street Journal:

The new General Motors exited bankruptcy protection early Friday after its faster-than-expected stint in court, pledging to "get back to the business of building great cars and trucks" and better serving customers.

he auto maker completed the split of good and bad assets that will see General Motors Co. emerge as the operating entity, a slimmed-down company mostly owned by the U.S. government with a much-reduced debt burden and fewer brands.

Mr. Henderson on Friday unveiled sweeping management changes and pledged to repay loans from the U.S. government "much sooner" than 2015

"Business as usual is over at General Motors," Chief Executive Fritz Henderson said at a press conference at GM's downtown Detroit headquarters, emphasizing the redoubled focus on listening to customers and on making faster decisions at the corporate level.

The company's new Chairman, former AT&T Corp. chief Edward Whitacre, said, "We all want to win, we are going to win."

GM's exit marks a surprisingly quick end to one of the largest industrial U.S. bankruptcies. GM, battered by a sharp decline in sales and high cost structure, received billions of dollars of government aid before filing for bankruptcy protection on June 1.

The new GM will be dramatically smaller, leaner and less encumbered by debt than the 100-year-old auto giant being left behind. As part of the sale, GM's toxic assets will be left behind as a separate company to be liquidated in a sale expected to last several years.

The revamped GM is eliminating much of its regional structure and realigning sales and marketing functions.

Nick Reilly, current head of GM Asia, will oversee all international operations from the unit's base in Shanghai. More than half of group sales come from outside North America.

Regional presidents are being eliminated. Mr. Henderson didn't comment on what role North American chief Troy Clark might assume, but noted 35% of its executive ranks are being cut, with an emphasis on senior staff.

GM also confirmed that Robert Lutz, who had been slated to retire at the end of this year, has decided to join the new GM as vice chairman responsible for all creative elements of new products and customer relationships. With the 77-year-old Mr. Lutz staying on, there would also be a realignment of the North American sales function, now headed by Mark LaNeve.

In an email Friday, Mr. Lutz said the move will allow him to focus more intently on his roots in the auto business. Although educated with a focus on marketing, he had been overseeing GM's efforts in product development since 2001.

"It's the other half of the business that I didn't have before, and I found that somewhat frustrating," Mr. Lutz said. "My entire academic and professional background is in marketing; I was practicing without a license in product development."

Mr. Henderson said GM's ability to repay U.S. government in full rested on its performance, but pledged to make repayments "much sooner" than the existing 2015 schedule.

Earlier this year, the auto maker had said a bankruptcy process would take months, if not years. The U.S. government, keeping GM afloat since December with billions in federal funds, will be majority owner of the newly restructured company, with a 60.8% stake. The Canadian federal government, Ontario provincial government, the United Auto Workers and bondholders in the old GM will hold the remaining stake.

Though the new GM will not be a publicly traded company initially, Mr. Henderson stressed that GM will remain transparent in its financial reporting.

"We expect to take the company public again as soon as practical, starting next year, and to repay our government loans as soon as possible," he said. "We are required to pay off the loans by 2015, but our goal is to pay them much sooner." The government has committed $50 billion in funds to GM.

The restructuring is expected to wipe out nearly 70% of GM's crushing debt load. GM entered Chapter 11 with $176 billion in liabilities to retirees, warranties and a legion of lenders including the U.S. government. A bankruptcy judge said Wednesday the company will exit with $48 billion in debt.

GM's U.S. work force will shrink dramatically as well, to about 64,000 employees by the end of 2009 from 91,000 heading into the year. Also going away are four of GM's eight U.S. brands, nearly one-third of its nameplates and hundreds of dealerships.

Some critics have described GM's product line-up as uncompetitive in some segments. Mr. Henderson said the company would launch 10 new products in the U.S. over the next 18 months, as well another 17 overseas. After trimming its dealer network, GM is also testing a new online auction buying system with eBay Inc.

Mr. Henderson said Friday that "true customer service" represented a "new frontier" for the industry.

Hourly labor costs, including obligations to active and retired workers, also will drop, from $6.4 billion in 2008 to between $4 billion and $5 billion annually over the next several years. By 2014, GM estimates its hourly costs at $4.1 billion, a two-thirds reduction from 2006.

GM is counting on the reductions to stem losses despite depressed auto sales. The auto maker estimates its post-bankruptcy break-even point will fall to 10 million annual U.S. vehicle sales, down from 12.5 to 13 million. The U.S. annualized selling rate has come in below 10 million for much of 2009.

GM will also end its regional operating structure, eliminating its regional president positions, as part of a broader effort to remove layers of management and to speed decision-making. In total, GM will reduce the number of U.S. executives by 35% by the end of this year. Overall salaried employment will decline by 20%.

Mr. Henderson said more details on the new structure and leadership moves will come later this month.

GM Reaches a Deal To Sell Its Hummer Brand

The Infamous Gas Guzzling Hummer







GM announced Tuesday that it has a Memorandum of Understanding to sell its Hummer brand, although it would not disclose the name of the buyer nor the price. The deal is expected to close by the third quarter of this year.

Under the proposed deal, Hummer will continue to contract vehicle manufacturing and business services from GM during a defined transitional time period.

The automaker has been reviewing options for the past year for the gas-guzzling brand.

GM sold about 27,485 Hummers in the United States in 2008, down 51 percent from a year earlier. Hummer SUVs starts at roughly $31,000 and go up to nearly $72,000 with options.

There were reportedly three bidders for the gas guzzling lineup of SUV's. One from the US and two from overseas. GM's sale of the Hummer brand is long overdue and many point to the acquisition of Hummer as one of the many business errors leading up to their bankruptcy filing on Monday.

GM Makes It Official - They Are Bankrupt

GM officially filed for Chapter 11 bankruptcy protection this morning in the third largest filing ever in US history. Here is a list of the biggest losers since 1980:

COMPANY/YEAR	TOTAL ASSETS
Lehman Brothers Holdings Inc (2008)	$691,063,000,000
WorldCom Inc (2002)	103,914,000,000
General Motors Corp (2009)	91,047,000,000
* Enron Corp (2001)	65,503,000,000
Conseco Inc (2002)	61,392,000,000
Chrysler LLC (2009)	39,300,000,000
Thornburg Mortgage Inc. (2009)	36,521,000,000
Pacific Gas and Electric Co. (2001)	36,152,000,000
Texaco Inc (1987)	34,940,000,000
Financial Corp of America (1988)	33,864,000,000
Refco Inc (2005)	33,333,172,000
Washington Mutual Inc. (2008)	32,900,000,000
** Global Crossing Ltd. (2002)	30,185,000,000
General Growth Properties Inc. (2009)	29,557,000,000
Lyondell Chemical Co. (2009)	27,392,000,000
UAL Corp. (2002)	25,197,000,000
Delta Air Lines Inc. (2005)	21,801,000,000
Adelphia Communications Corp (2002)	21,499,000,000
MCorp (1989)	20,228,000,000
Mirant Corp. (2003)	19,415,000,000
Delphi Corp (2005)	16,593,000,000

What will become of the new company once they emerge from this reorganization? Will they truly be more lean and mean and will they actually begin offering competitive, quality products that customers want? Unless they get to a point where they can hold their own, then another bankruptcy will be in the cards.

What about future GM customers? Will they be willing to purchase vehicles from a bankrupt company? How will the consumer know whether or not GM will be around 2 years from now? Only time will tell but it is this author's opinion that customers will choose vehicles from other manufacturer's such as Ford, Honda and Toyota.

The United States WIll Spend $30 Billion To Finance GM Bankruptcy

The amount of money that has been given General Motors since December is simply staggering. Now it will cost us $30 billion to get them through bankruptcy and essentially "sell" the company to the US Government. Just what we need, a decrepit auto manufacturer.

From Automotive News:

The Obama Administration expects to take General Motors into Chapter 11 bankruptcy Monday and quickly get the carmaker out with $30.1 billion in bankruptcy financing, the White House said in a statement.

The federal government will have the right to replace GM's current board of directors with its own trustees, except for one director who will be picked by the Canadian government and another selected by a UAW-administered retiree health care trust.

But the White House vowed to exercise its ownership stake in GM "in a hands-off, commercial manner." That is, to let it operate as a car company, not a government agency.

The Obama administration said it didn't intend to provide funding beyond the $30.1 billion in bankruptcy financing. The government has already assisted GM with $19.4 billion since late December.

The $30 billion will give the government a 60 percent stake in a reorganized GM. The governments of Ontario and Canada will provide another $9.5 billion in financing to GM for a 12 percent stake in the new GM.

Dealerships that GM plans to discontinue will be offered an agreement to phase out their stores over the next 18 months.

As part of first day bankruptcy court hearings, GM will ask that dealer incentives owed before the filing be paid for those dealers that GM intends to keep. The company also will ask the court to let it honor all customer warranties, and the administration will allot $361 million to support those warranties.

Chrysler LLC was able to persuade the same New York bankruptcy court to hear the GM case to approve similar measures after its April 30 bankruptcy filing.

More pain for UAW

More pain is in store for the UAW members as well. GM intends to announce that it will close 11 plants and idle three others. The carmaker had aimed in February to cut 21,000 more hourly workers. GM employs about 54,000 workers represented by the UAW.

With the necessary reductions in capacity and a cleaned-up balanced sheet, a reorganized GM will be able to break even on its operations at 10 million annually in industry-wide U.S. vehicle sales, the administration said. The previous breakeven point was 16 million sales, according to the White House.

Contract concessions approved by the UAW last week will save GM about $1.2 billion annually. That agreement calls for elimination of bonuses and cost-of-living increases as well as more flexible factory rules.

The UAW also agreed to accept GM equity instead of cash for most of the funding of the retiree health care trust known as a Voluntary Employee Beneficiary Association.

A majority of GM bondholders also have agreed to a major discount on the total $27.1 billion in unsecured bond debt that they hold.

More than 1,000 bondholders representing at least 54 percent of the bonds said they would take a deal in exchange for 10 percent of equity in the new GM, plus warrants for an additional 15 percent of the new company. That offer was sweetened from a straight 10 percent in the original government offer.

The 54 percent approval of bondholders is still far short of the 90 percent desired by the White House. But the majority approval sets the stage for a quicker resolution of the issue in bankruptcy court.

General Motors, Magna and Germany Agree To Deal That Saves Opel

It took last minute heroics and lots of euros, but now Opel will escape the bankruptcy certainly facing GM. Magna is a Canadian auto parts group with big plans for Opel, including a sales push into Russia. The deal includes a bridge loan of up to $1.5 billion euros which comes courtesy of the German government. The contract will take up to five weeks before being formalized.

From Automotive News:

Germany reached a landmark deal with Canadian auto-parts group Magna, General Motors and governments to save Opel from the imminent bankruptcy of its U.S. parent, German leaders said on Saturday.

Finance Minister Peer Steinbrueck told journalists waiting outside Chancellor Angela Merkel's offices for the six-hour meeting that a comprehensive accord had been forged.

"I can tell you that a deal has been reached," Steinbrueck said shortly after 2 a.m. He added that the agreement included bridge financing for Opel worth 1.5 billion euros ($2.1 billion) and a trustee model for the German carmaker.

Siegfried Wolf, co-CEO of Magna International Inc., cautioned there were still details to be ironed out.

"In five weeks' time we should have the formal signing of the contract," he said.

Hesse state premier Roland Koch said, for example, the state assemblies in both Hesse and North Rhine-Westphalia -- two of four states with Opel plants -- would still have to endorse it. He said he hoped that could be completed by Sunday.

Leaders of all four states have endorsed the deal.

Steinbrueck said U.S. Treasury representatives at the meeting had also backed the agreement.

Economy Minister Karl-Theodor zu Guttenberg renewed his reservations about risks involved with the rescue but added there would also have been risks if Opel declared bankruptcy.

Seeking support

Magna and Opel had presented their plan to senior German officials and representatives of the U.S. Treasury to win their support and ensure the release of the financing that Opel desperately needs to survive over the coming months.

An agreement between GM and Magna is a first step toward securing the future of Russelsheim-based Opel, which has been under GM's control for the past 80 years and traces its roots in Germany back to the 19th century.

"I think this is the start of a new future for Opel, for the workers, the company and the brand," GM Europe head Carl-Peter Forster told journalists. He added, however, that there would still be some hard negotiations on the fine print ahead.

The German government has been scrambling to safeguard Opel's future before GM files for bankruptcy, a step which is expected to come by Monday.

A first round of talks in Berlin collapsed amid mutual recriminations on Thursday morning, prompting the German government to set a new round of negotiations for Friday.

Italian carmaker Fiat S.p.A., Magna's main rival in the battle for Opel, pulled out of talks, leaving the door open for Magna, North America’s largest supplier. It was started by Austrian emigre Frank Stronach in a Toronto garage nearly half a century ago.

Magna plans to use Opel to push into Russia, Europe's fastest-growing car market before the economic crisis hit.

The company, which has 70,000 employees in 25 countries, supplies components and systems to many of the world's leading carmakers, including fuel tanks and radiator grilles for the Mercedes-Benz C-Class and fuel filters for the BMW X3.

Fiat: Life goes on

Speaking to reporters in Montreal, Fiat CEO Sergio Marchionne had earlier appeared to concede defeat to Magna, saying his focus was on the company's deal with Chrysler.

"If the Opel transaction is not available to Fiat, life will move on," he said.

A stumbling block had been U.S. Treasury opposition to German demands that Opel assets be temporarily placed in a trust to protect them from GM creditors. Germany now will release the bridge financing to tide Opel over until a merger is completed.

Opel employs 25,000 staff in four German plants.

It is part of a GM Europe operation that employs more than 50,000, with car manufacturing plants in Spain, Poland, Belgium and Britain, where Opel cars are sold under the Vauxhall brand, as well as engine and parts sites such as Aspern near Vienna.

Like its parent GM, Opel has suffered acutely from the worldwide economic slowdown. Its fate is being followed closely in Germany, where the auto industry remains a potent symbol of the country's postwar recovery and export-driven economy.

Merkel faces an election in September and was keen to ensure a deal that would avert large job losses.

Update On GM's Impending Bankruptcy

Here is a good update on the events leading up to Monday's deadline for General Motors.

From Yahoo News:

The speed at which General Motors Corp. exits bankruptcy protection would 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 Friday, when talks are scheduled to resume in Germany about the future of GM's European Opel unit.

GM's union employees also finish voting Friday 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. A bankruptcy judge is expected to decide Friday whether to approve the sale of most of its assets to Italian carmaker Fiat Group SpA.

The administration official said that although the government hopes to get back as much of the money loaned to GM and Chrysler as possible, it never envisioned recovering much of the initial $13.4 billion in aid.

Eventually, the government hopes, GM can return to profitability, which would allow the government to sell its GM stock. But the risks for taxpayers are daunting, with U.S. auto sales near their lowest level in 27 years.

"We will come out of this rid of some of the historic legacy costs that have been dragging us down for the last 20 years or so," GM Vice Chairman Bob Lutz said Thursday at an Automotive Press Association luncheon in Detroit. "We will come out of it with an all new focus on product development."

Under the government's offer, bondholders would get 10 percent of the stock in a newly formed GM, the same as a proposal that they shunned earlier this week. But the new offer also gives them warrants to buy an additional 15 percent stake, possibly at a discount.

That would come only if they agree to support selling GM's assets to a new company under bankruptcy court protection.

The revised offer amounted to an ultimatum: Go along with the government auto task force's proposal or face substantial reduction in the amount of stock and warrants they will get.

"They have sweetened the deal by adding the warrants to the equation," said Pete Hastings, senior analyst with Morgan Keegan & Co. "It's enough for me to have moved from rejecting the deal and trying our luck in bankruptcy court to the side of recommending the deal."

A bloc of bondholders who represent about 20 percent of GM's $27 billion in unsecured debt called the deal unfair but said they'll take it rather than roll the dice in bankruptcy court and risk getting even less.

Two coalition of smaller bondholders, meanwhile, opposed the offer, saying it remained unfair to retirees who depend on GM bonds for income and was overly favorable to the UAW.

Union President Ron Gettelfinger said in a telephone interview he did not want to get into a debate with bondholders while the union was pushing for ratification of concessions to GM. Union members were to wrap up voting Friday.

The filing didn't specify how many bondholders would be needed to make the deal work. The government had demanded that 90 percent agree to the previous offer, and it fell far short. The Obama administration official said the government would not require a specific percentage of bondholders to approve the new proposal but would make a judgment call based on the level of support.

Representatives of the committee of larger bondholders were trying to contact the thousands of GM bondholders before a deadline of 5 p.m. Saturday.

The government plan envisions the slimmed-down new GM with $17 billion in long-term debt and $9 billion in debt-like preferred shares. That would be 61 percent less than its debt load now.

Only $8 billion of the existing U.S. government loans would remain on the books. The remainder would be converted into equity and preferred shares.

The Obama administration official said the holders of GM's $6 billion in secured debt would be "protected" but declined to elaborate.

Trading of GM shares was halted for a short time Thursday morning. They fell 3 cents to end at $1.12 after a day of volatile trading.

General Motors Withdraws Offer for Bond Debt Swap, Bankruptcy Imminent

General Motors World Headquarters








General Motors Corp. on Wednesday withdrew its offer to swap bond debt for company stock, saying that too few bondholders agreed to the deal. The move sets the stage for what almost certainly will be a bankruptcy filing.

GM has until Monday to finish restructuring or file for reorganization under Chapter 11. But the company said Wednesday that its offer to exchange $27 billion in unsecured debt for 10 percent of the company's stock had failed.

GM has received $19.4 billion in federal loans. The Monday deadline was set by the government and includes debt reduction, labor cost cuts and plant closures.

The automaker said its board will meet to decide its next step.

"The principal amount of notes tendered was substantially less than the amount required by GM to satisfy the debt reduction requirement under its loan agreements with the U.S. Department of the Treasury," GM said in a statement issued Wednesday.

The Obama administration has said it would only provide more funds if 90 percent of the bondholders, as well as unionized workers, agreed to concessions that substantially reduced GM's costs.

There was a small hope Tuesday that GM could avoid a bankruptcy filing when the United Auto Workers union disclosed that it would take a 20 percent stake in GM — down from the original plan of 39 percent. That seemingly freed 19 percent of the Detroit-based company's shares to sweeten the pot for its recalcitrant bondholders.

But because the bondholder deal did not go through, the equity freed by the UAW deal now apparently will go to the U.S. government, which may have to commit billions more for GM's restructuring in court.

The government's stake in the company originally was to be 50 percent, according to GM's regulatory filings. But it now could be as high as 69 percent. The Canadian government also could get equity for up to $8 billion in aid for the automaker.

Such an arrangement would leave bondholders back where they started — and a Chapter 11 filing all but certain. The deadline for GM's bondholders to tender their debt was midnight Tuesday.


Source: Yahoo News

Update On GM Progress (With Comments From Obama)

This is the last week before GM faces its June 1st deadline. I have included the scurrying events taking place this week.

From Automotive News:

UAW officials will gather on Tuesday to hear how many more U.S. factory jobs GM will cut as the 100-year-old automaker enters what may be its last week outside bankruptcy.

Union officials representing 54,000 General Motors workers are scheduled to meet in Detroit to prepare for a quick ratification vote on a cost-cutting labor deal negotiated last week. The union aims to complete those votes by Thursday.

Approval of the contract, which would change payment terms on $20 billion owed to a UAW trust fund, represents one of the hurdles for GM to clear before a June 1 deadline set by the Obama administration.

GM, which has received $19.4 billion in government funding since the beginning of the year, has been struggling to cut costs and reduce debts in order to continue to receive more government aid.

The company on Friday said it expected to need another $7.6 billion from the U.S. Treasury after June 1.

Across the border in Canada, GM workers at plants in Ontario on Monday ratified concessions negotiated last week with a vote of 86 percent in favor.

"This has been a grueling restructuring process, and no one has felt that more than our members and retirees," Canadian Auto Workers President Ken Lewenza said in a statement.

The new contract cuts GM's hourly labor costs in Canada by almost 30 percent, including an earlier round of concessions.

Task force on task

Meanwhile, GM and the U.S. auto task force worked through the weekend on a restructuring expected to send the automaker into bankruptcy.

"We have routine and frequent contact with the task force," GM spokesman Greg Martin said of the White House-appointed panel overseeing the overhaul of GM and bankrupt Chrysler.

GM faces a series of interim deadlines through this week. That includes a decision expected this week by the German government on the preferred bidder for GM's Opel unit.

GM will also learn on Wednesday how much of its $27 billion in bond debt was tendered in exchange for shares. GM has set a target of slashing 90 percent of its bond debt, a goal analysts see as unreachable.

Wednesday's bondholder deadline for GM coincides with an equally crucial turning point for its smaller rival Chrysler, which has been operating in bankruptcy since April 30.

Bankruptcy Judge Arthur Gonzalez could rule as early as Wednesday on whether Chrysler will be allowed to sell its most valuable assets to a new company that would be under the operational control of Italy's Fiat S.p.A.

If that approval is granted, a deal to create a merged Chrysler-Fiat with the backing of the U.S. government could be closed by the middle of next month.

Chrysler dealers object

The fiercest opposition has come from the ranks of the 789 dealers that Chrysler wants to drop from its retail network.

"Instead of allowing the free market to determine which dealers survive, Chrysler and the government are effectively playing the roles of judge, jury and executioner," a committee of dealers opposed to the action said in an e-mail seeking support for their position on Monday.

About 330 Chrysler dealers from 47 states have joined the group, lawyers for the group said in a court filing on Monday.

At Richard Chrysler Jeep Dodge, about 45 miles west of Chicago, on Monday a steady stream of shoppers were looking for a deal on the 50 remaining vehicles on the lot.

"We don't know why we're on the (closure) list," said Marni McClennan, a saleswoman at the dealership. "The irony is we could do with more inventory right now because we're actually selling cars. We've had so many people coming in over the past few days it's hard to keep up.

A U.S. Treasury spokeswoman declined to comment on the status of GM negotiations.

GM and the UAW reached a tentative contract last week but details of the proposed pact have not yet been released.

Local UAW bargaining units posted notices for workers to be prepared to vote on the new contract within a day after they were briefed on its details.

That fast-track schedule is needed "to meet the United States government-issued deadline," UAW Local 276 President Enrique Flores said in posting on the local's Web site.

Import controversy

A key question is whether GM rolled back on plans to cut 21,000 UAW-represented factory jobs at the same time that it presses ahead with increased imports to the United States from its factories in China, Mexico and South Korea.

Under pressure from the Obama administration, GM has been rushing to complete plans to cut costs and debt and spin off brands including Saab, Opel, Hummer and Saturn.

But bondholders have balked at proposals that they forgive debt in exchange for a 10 percent stake in a restructured company.

Under GM's current plan, a UAW trust fund for health care would get about a 39 percent GM stake. The U.S. Treasury would hold a 50 percent stake. Current shareholders would be left with just 1 percent of a restructured company.

The standoff between GM and its bondholders sets the stage for a bankruptcy filing, analysts have said.

A person familiar with Obama administration thinking on the matter said the administration was continuing to engage with GM bondholders to reach agreement on restructuring.

The person, who was not authorized to speak publicly on the situation, reiterated that there were no plans to steer GM into a bankruptcy filing before June 1.

Shares of GM, which the automaker has warned could be worthless in a bankruptcy, fell 36 percent from their highs in volatile trading last week to $1.43.

The U.S. government has provided a combined $36.6 billion to GM, Chrysler and their financing units since December.

In an interview broadcast over the weekend, Obama said he hoped GM and Chrysler would emerge from restructuring "leaner, meaner, more competitive."

"Ultimately, I think that GM is going to be a strong company," he said.

General Motors Gets Another $4 Billion - How does That Make You Feel?

GM needs to make a $1 Billion note payment and is facing a very probable bankruptcy, yet now we read that they are receiving another $4 Billion loan from Uncle Sam. How does that make you feel? I find it inconceivable as well as irresponsible that we would give a huge loan to a company that is most certainly facing bankruptcy.

What is the point? Will another $4 Billion prevent them from filing for protection? Will more money cause GM to change their business strategies and let them offer better cars next month? They have one week left, so it won't take long for us to find out!

From Automotive News:

General Motors on Friday borrowed another $4 billion from the U.S. Treasury and won a cost-cutting deal from Canadian auto workers as a showdown with bondholders set the stage for a bankruptcy filing by the end of the month.

The latest emergency funds extended by the Obama administration take the total government funding to keep GM afloat since the start of the year to $19.4 billion.

GM said it expected that total to rise to $27 billion after June 1, a government-imposed deadline for the embattled automaker to achieve a sweeping restructuring analysts say will require bankruptcy to complete.

The tentative agreement with the Canadian Auto Workers union, if ratified, would reduce hourly compensation costs by about 28 percent after including a round of concessions the union agreed to give in March.

A day earlier, GM won similar concessions from the UAW to reduce operating costs and pay the union in stock instead of cash to fund a retiree healthcare trust.

Along with plans to drop dealers and unprofitable brands Hummer, Saturn, Pontiac, Saab and Opel, the pair of labor deals would help clear the way for GM to enter bankruptcy protection with the backing of the Obama administration.

"All of our discussions that we had, it's very likely that they will go into Chapter 11," CAW President Ken Lewenza said at a Toronto news conference to announce the union's tentative contract agreement with GM.

In Europe, GM also appeared to be nearing a resolution of its long-running effort to find a buyer for its Opel unit.

Magna International emerged as the favorite to acquire Opel after top German officials said Canada's largest car-parts group had submitted a better plan than rival bidders Fiat and Belgian-listed private equity investor RHJ International.

Bondholders next

GM faces a June 1 deadline to restructure its debt and operations and has said it could file for bankruptcy if it fails to get bondholders to agree to forgive some $24 billion -- or 90 percent -- of the amount they are owed.

Under Obama administration orders, GM has offered bondholders a 10 percent stake in a restructured company.

A spokesman for a committee representing GM bondholders said institutional investors solidly oppose that offer as insufficient.

"It's been a universal no from the get-go," said Nevin Reilly, a committee spokesman. "Bondholders are being seen as speculative bad guys; but bondholders are investors, many of whom put their retirement money into GM."

Creditors have complained their rights have been ignored in the restructuring of both GM and its smaller rival Chrysler, which has been operating in bankruptcy since April 30.

GM and Chrysler plan to drop about 2,400 U.S. dealerships in the next 18 months, a move criticized by some U.S. lawmakers.

Critics argue that the Obama administration has favored the position of unionized auto workers and has run roughshod over claims from other creditors in the process.

Four Republican lawmakers sent a letter of protest to Treasury Secretary Timothy Geithner on Friday saying that the Obama administration was undermining GM bondholders in order to favor the UAW, a political ally.

"We are extremely concerned that in the name of restructuring General Motors, the presidential task force on the auto industry has begun waging what some believe amounts to a war on capital," the letter said.

"Bondholders must have a seat at the table during negotiations in how the company would be restructured," said the letter to Geithner from Representatives Jeb Hensarling, Eric Cantor, Mike Pence and Pete Sessions.

Bondholder sacrifice

Austan Goolsbee, a member of the White House Council of Economic Advisers and the autos task force, said GM bondholders need to recognize that they must sacrifice.

Goolsbee said he expects GM's restructuring efforts to run right up to the June 1 deadline but not beyond. "Usually these things, and as you saw with Chrysler, go right up to the deadline," he said.

The CAW's Lewenza said the Canadian union had been told that it needed to reach a new contract deal with GM urgently so that Obama could review the terms of GM's business plan.

Lewenza said he was told that Obama would need to see the GM business plan, which will include details of how many jobs it will cut, by the weekend.

The Obama administration steered Chrysler into bankruptcy with an aim to push it through the court process within 60 days. That bankruptcy has been watched as a kind of dry run for the more complex reorganization expected from GM and has moved quickly so far.

The Chrysler plan is to sell substantially all of its assets to a new company owned by Fiat, a UAW healthcare trust, and the U.S. and Canadian governments.

Fiat, Chrysler and the automaker's creditors filed court papers on Friday in support of the planned sale and urged a federal judge to reject an appeal by a group of Indiana pension funds that have sought to have the transaction postponed.

Fiat said in court papers that it was concerned about the "deteriorating value" of Chrysler's assets and said a delay "could ultimately prove fatal" to its plans.

GM shares -- which the automaker has warned could be worthless in bankruptcy -- closed down 25 percent on Friday.

What is To Become of Dear Old General Motors?

A GM EV1 Prototype of a Series Hybrid - 1999










They have until June 1st. All indications point to utter failure. What will become of former US business icon, General Motors?

They need to sell Saturn.
They need to sell hummer.
They need to sell Opel.
They need to come to terms with the Canadian Auto Anion.
They need to make a one billion dollar payment.

They can do none of the above. What I would like to see GM do is repay the billions that were given them by the taxpayers of the United States. Do you think this will happen? Neither do I.

I would like to see them resume production of the EV1 and S-10 Electric pickup. Do you think that will happen? Neither do I. I would also like to see GM make the Volt TODAY with the Panasonic PbA battery that gave the EV1 a 100 mile range. That will not happen either. We have to wait another two years for them to perfect a Li ion battery for the Volt that may be incapable of perfection.

But really, what should be done with General Motors? Shouldn't they be left out to dry and go belly up? Then their sales would plummet like never before as auto buyers shy away from a miserable, decrepit bankrupt company and head over to the Toyota or Honda dealership. It is time for GM to be shuttered, have all their assets sold at auction with the proceeds going back to the US Treasury.

GM Future and Possible Bankruptcy Clarified

Have you wondered what GM is trying to prove or what steps they need to take in order to avoid bankruptcy? Do you think they can avoid it? I believe it is inevitable and would prefer they started the process already and quit wasting time.

Here are the key highlights and associated dates:

• May 20 - Italy's Fiat S.p.A. is to present its plan for GM's Opel European operations under a deadline set by Germany. Fiat is in the process of acquiring as much as 35 percent of Chrysler.

• May 27 - Deadline for holders of some $27 billion of GM unsecured debt to decide whether they will exchange their debt. GM has said that it must get a 90 percent participation or it would have to seek bankruptcy protection.

• May 28 - GM plans to make monthly payment to North American parts suppliers, moving them forward from June 2.

• May 31 - Some 1,100 U.S. dealers notified by GM on May 15 that their long-term franchise agreements ending in October 2010 would not be renewed have until the end of the month to submit new information to the automaker. GM does not believe that new information would change its position.

• June 1 - $1 billion bond payment due, but GM has said it did not expect to make the payment because it would either be restructuring the debt voluntarily or through a bankruptcy court process.

• June 2 - Automakers scheduled to report May auto sales. Investors could put a special focus on Chrysler, which filed for bankruptcy protection April 30, and GM with expectations now leaning toward a bankruptcy filing.

Bob Lutz And Five Other Execs Cash In Their GM Stock

GM World Headquarters







These six executives disclosed that they sold their GM shares this past Friday and Monday. This is an obvious sign of a GM bankruptcy. After all the free money they received from the government, GM simply could not make it work. Once they fold, Ford will be sole survivor of the "Detroit Three" to survive without bankruptcy. Chrysler is currently in the midst of their bankruptcy proceedings.

According to the filings, the five other executives who sold all of their GM stock holdings were: Lutz's successor, Thomas Stephens; GM North America President Troy Clarke; Chief Information Officer Ralph Szygenda; manufacturing chief Gary Cowger; and head of European operations Carl-Peter Forster.

In filings with U.S. securities regulators, the GM insiders led by former Vice Chairman and product chief Bob Lutz detailed stock sales on their behalf on Friday and Monday during a trading window for such transactions.

Lutz, who is now an adviser to the automaker, sold $130,989 worth of GM stock at the closing price of $1.61 on Friday.

That sale of the 81,360 shares cleared out all of Lutz's direct holdings of GM stock, according to his filing with the Securities and Exchange Commission.

GM is headed for either a bankruptcy filing or an out-of- court restructuring that would wipe out current stockholders by flooding the market with new shares to pay off creditors.

GM Pushes Forward With Volt Project in Spite of Staggering Financial Losses

The 2010 Chevrolet Volt





General Motors is working without interruption on the Chevrolet Volt plug-in hybrid despite mounting financial woes and the threat of bankruptcy, said Tom Stephens, the automaker's product development chief.

"At this point in time, I know of no reason why we can't be in production by November of 2010," Stephens told reporters on the sidelines of an event at the University of Michigan. Earlier today, GM posted a $6 billion net loss for the first quarter, its seventh straight quarterly loss.

Stephens said GM is deciding which of the three other surviving GM brands -- Cadillac, Buick or GMC -- would get a vehicle with the Volt's hybrid powertrain.

"It's best utilized in urban vehicles," Stephens said, referring to the Volt's ability to drive the first 40 miles on electric power only. "We have to consider what is the usage of the person buying the vehicle. For a commuter who drives 40 miles a day and takes it shopping on weekend, it's the perfect application.".

Stephens said the chief guiding factor behind GM's future products is that every vehicle being developed has be a leader in price, quality, styling and performance.

He said CEO Fritz Henderson and other top executives believe "the biggest thing you can do to have a sustainable automobile company is to make great cars and trucks."

Stephens succeeded Robert Lutz as vice chairman of global product development on March 31. Lutz will advise the company through the end of the year.

GM announced today that it is creating the Institute of Automotive Research and Education with the University of Michigan.

Source: Automotive News

Another Massive Loss Posted By General Motors

When will the bloodletting ever abate? How much longer should GM be allowed to wallow before declaring bankruptcy and starting over?

From Automotive News:

General Motors, facing a June 1 U.S. restructuring deadline to avoid bankruptcy, posted its seventh straight quarterly loss in the first quarter as its global auto sales fell 28 percent.

The company said it burned through $10.2 billion in cash while being supported by $13.4 billion in U.S. loans in the quarter and an additional $2 billion since.

The net loss was $6.0 billion, compared with a $3.3 billion loss a year earlier and adding to $82 billion in annual losses since 2004. GM's global revenue declined 47 percent to $22.4 billion.

"Our first-quarter results underscore the importance of executing GM's revised Viability Plan, which goes further and faster to lower our break-even point," said CEO Fritz Henderson in a statement. "Our plan is designed to fix the fundamentals of our business by restructuring and deleveraging our balance sheet, enhancing our revenue capability and dramatically reducing costs."

The first-quarter operating loss was $5.9 billion, compared with an adjusted net loss of $381 million in the first quarter last year.

GM is racing to beat the U.S. auto task force's June 1 deadline to complete a turnaround and secure deals with the UAW and bondholders to reduce debt.

Without additional concessions, Henderson, who took over more than a month ago from the ousted Rick Wagoner, has said the automaker will file for bankruptcy.

Even if it clinches debt-restructuring deals, GM said this week it could issue up to 60 billion new shares to pay off its debt to the government, bondholders and the UAW. That flood of new shares would leave current GM investors with 1 percent of the restructured company and take the value of the stock to less than 2 cents. GM shares fell 10.3 percent on Wednesday to $1.66. "We would like to see actions that will ultimately position GM to be a smaller but profitable automaker along with details on how it will achieve this," S&P equity analyst Efraim Levy said in a statement before today's results were released. "Unfortunately for GM current shareholders, we do not expect them to meaningfully share in any recovery."

Request to creditors GM has asked its three major creditor groups to write off at least $43 billion in debt in exchange for ownership stakes in a restructured company. GM bondholders, who are owed $27 billion, have also been offered new stock in exchange for writing off debt in a bond exchange the automaker launched last week. GM is targeting a reduction of at least $24 billion, or 90 percent, of its bond debt under the plan and has warned that it could be forced into bankruptcy if that cannot be achieved. Barclays Capital analyst Brian Johnson said the success of bankrupt Chrysler LLC in winning approval to sell most of its assets quickly made it more likely that GM would follow its smaller rival into court protection.

Chrysler to Receive $8 Billion More in Government Aid to Make it Through Bankruptcy

Chrysler will file for bankruptcy after talks with a small group of creditors crumbled just a day before a government deadline for the automaker to come up with a restructuring plan, President Barack Obama said Thursday.

The Obama administration said it had long hoped to stave off bankruptcy for the nation's third largest automaker, but it became clear that a holdout group wouldn't budge on proposals to reduce Chrysler's $6.9 billion in secured debt. Clearing those debts was a needed step for Chrysler to restructure by the Thursday deadline.

Chrysler will file for Chapter 11 bankruptcy protection in New York, giving Chrysler time to galvanize a partnership with the Italian car maker Fiat Group SpA. The government, which has already poured $4 billion in loans into Chrysler, would provide up to $8 billion more to carry the company through bankruptcy, said senior administration officials speaking on condition of anonymity. The government will also help appoint a new board of directors.

The deals give Chrysler "a new lease on life," President Barack Obama said.

"This is not a sign of weakness," he said. "I have eery confidence that Chrysler will emerge from this process stronger and more competitive."

Under bankruptcy, Chrysler would still sell cars and the government would back its auto warranties.

The officials, speaking on condition of anonymity because the terms of the bankruptcy had not yet been released, said there would be no job losses or plant closing due to the Chapter 11. But it will be up to Fiat and Chrysler to decide whether to restructure the steadily shrinking company.

Obama said Chrysler Financial, the arm of the company that makes loans to buyers and to dealers to finance their inventories, will be merged into GMAC Financial Services, once General Motors Corp.'s finance arm. The new GMAC will get government support.

The Treasury Department's auto task force has been racing in the past week to clear the major hurdles that prevented Chrysler from coming up with a viable plan to survive the economic crisis ravaging nation's automakers.

Along with the Fiat deal, the United Auto Workers ratified a cost-cutting pact Wednesday night.

Treasury reached a deal earlier this week with four banks that hold the majority of Chrysler's debt in return for $2 billion in cash.

But the administration said about 40 hedge funds that hold roughly 30 percent of that debt also needed to sign on for the deal to go through. Those creditors said the proposal was unfair and they were holding out for a better deal.

A person briefed on Wednesday night's events said the Treasury Department and the four banks tried to persuade the hedge funds to take a sweetened deal of $2.25 billion in cash. But in the end, this person said most thought they could recover more if Chrysler went into bankruptcy and some of its assets were sold to satisfy creditors. This person asked not to be identified because details of the negotiations have not been made public.

Fiat will obtain a 20 percent stake in Chrysler in return for giving the company access to its fuel-efficient technology, a move toward cleaner cars that the Obama administration thinks is critical to Chrysler's future survival. The company has committed to building Fiat cars in Chrysler factories, to be sold as Chryslers.

The bankruptcy will be filed under a section of the law that allows a company to shed bad assets and some liabilities. The administration expects it to last only up to 60 days.

Obama's auto task force in March rejected Chrysler's restructuring plan and gave it 30 days to make another effort, including a tie-up with Fiat. The company has borrowed $4 billion from the federal government and needs billions more to keep operating.

The UAW agreement, which would take effect May 4, meets Treasury requirements for continued loans to Chrysler Corp., and includes commitments from Fiat to manufacture a new small car in one of Chrysler's U.S. facilities and to share key technology with Chrysler.

Meanwhile, the Fiat partnership means Chrysler CEO Robert Nardelli could be out of a job. In an April e-mail to employees, he said that if the deal is completed, Chrysler would be run by a new board appointed by the government and Fiat. The new board, Nardelli wrote, would pick a CEO "with Fiat's concurrence."

Sergio Marchionne, CEO of the Italian automaker, told reporters earlier this month that he could run Chrysler. Obama said Wednesday that Fiat's management "has actually done a good job transforming their industry."

___

Source: Yahoo News

US Government Directs GM Towards Bankruptcy

This could be the beginning of the end. The Treasury Department is insisting that GM lay the groundwork for a June 1st bankruptcy filing. Hard to imagine the once mighty company biting the dust, but this looks unavoidable.

From nytimes.com:

The Treasury Department is directing General Motors to lay the groundwork for a bankruptcy filing by a June 1 deadline, despite G.M.’s public contention that it could still reorganize outside court, people with knowledge of the plans said during the weekend.

Members of President Obama’s automotive task force spent last week in meetings and on conference calls with G.M. officials and its advisers in Detroit and Washington. Those talks are expected to continue this week.

The goal is to prepare for a fast “surgical” bankruptcy, the people who had been briefed on the plans said. G.M., which has been granted $13.4 billion in federal aid, insists that a quick restructuring is necessary so its image and sales are not damaged permanently.

The preparations are aimed at assuring a G.M. bankruptcy filing is ready should the company be unable to reach agreement with bondholders to exchange roughly $28 billion in debt into equity in G.M. and with the United Automobile Workers union, which has balked at granting concessions without sacrifices from bondholders.

President Obama, who was elected with strong backing from labor, remained concerned about potential risk to G.M.’s pension plan and wants to avoid harming workers, these people said.

None of these people agreed to be identified because they were not authorized to discuss the process. G.M. declined to comment and the Treasury Department did not comment.

One plan under consideration would create a new company that would buy the “good” assets of G.M. almost immediately after the carmaker files for bankruptcy.

Less desirable assets, including unwanted brands, factories and health care obligations, would be left in the old company, which could be liquidated over several years.

Treasury officials are examining one potential outcome in which the “good G.M.” enters and exits bankruptcy protection in as little as two weeks, using $5 billion to $7 billion in federal financing, a person who had been briefed on the prospect said last week.

The rest of G.M. may require as much as $70 billion in government financing, and possibly more to resolve the health care obligations and the liquidation of the factories, according to legal experts and federal officials.

Since replacing Rick Wagoner on March 31, G.M.’s chief executive, Fritz Henderson, has sent increasingly clear signals that bankruptcy is probable unless agreements are reached with labor and the bondholders by the administration’s June 1 deadline.

Unlike Mr. Wagoner, who refused until his final days at G.M. to consider a Chapter 11 filing, Mr. Henderson has deployed staff to work with legal and government advisers, although he does not agree a bankruptcy is inevitable.

Last week, he said G.M. was proceeding on a dual track, hoping to restructure out of court, but also preparing for a filing.

“If we need to resort to bankruptcy, we have to do it quickly,” Mr. Henderson said in an interview with the Canadian Broadcasting Corporation.

John Paul MacDuffie, an associate professor at the Wharton School at the University of Pennsylvania, said he saw little chance of an out-of-court restructuring, given that the Obama administration had rejected G.M.’s proposed revitalization plan in March. It was submitted without the concessions that were required from bondholders and the union, and which have still not been reached.

“The simplest way to frame it is that they took the loans, there were conditions on the loans, they didn’t prove their case for financial viability, and they didn’t meet the deadline, either,” Professor MacDuffie said.

Lawyers for G.M. and the government have much work to do before any bankruptcy case can begin, executives with bankruptcy experience said last week.

First and foremost, G.M. would have to formulate a business plan that addresses virtually every aspect of the company that it hopes to transform while under bankruptcy protection.

It would have to show how it would save billions of dollars through agreements with its bondholders and unions, how many dealers it plans to keep, and the plants and offices it plans to either close or preserve.

The plan also needs to give a candid forecast of the car market, a tricky prospect given the sharp falloff in sales over the last few months, these executives said.

Treasury has hired the Boston Consulting Group to help with the business plan, according to a notice posted April 8 on FedBizOpps.gov, a government procurement Web site.

Participation from banks also may be needed, and because of the weak economic climate, lenders are likely to insist that G.M. wring as much out of its operations as possible.

“It’s a complex system and you’ve got to be thinking big,” Professor MacDuffie said.

Finally, legal experts said, G.M. would have to try to prevent panic among consumers in the event of a bankruptcy filing. The government has said it will guarantee G.M.’s vehicle warranties.