- The Washington Times - Tuesday, May 12, 2009

DETROIT — Bankruptcy protection for the nation’s biggest automaker is becoming more probable with a deadline just over two weeks away, the company’s top executive said Monday.

General Motors Corp. CEO Frederick “Fritz” A. Henderson is still holding out hope that the company can restructure without court protection, but he said the tasks to complete before a June 1 government-imposed deadline are large.

The automaker, Mr. Henderson said, is looking at its operations country by country to determine where it might have to file for bankruptcy, but he said a U.S. bankruptcy doesn’t necessarily mean that GM would file in other locations.

“Certainly the task that we have in front of us is large,” Mr. Henderson said during a conference call with reporters to provide an update on the company’s restructuring efforts. “There is still an opportunity and still a chance for it to be done outside of a court process.”

GM has received $15.4 billion in federal loans, and the government deadline to restructure or seek Chapter 11 protection is a little more than two weeks away. But the company must reach concessionary agreements with unions, persuade thousands of bondholders to exchange $27 billion in debt for 10 percent of GM’s stock, cut thousands of dealers, close plants and lay off more salaried workers.

Under Chapter 11 reorganization, a company can stay in operation under court protection while it sheds debts and unprofitable assets to emerge in a stronger financial position.

GM is still in the process of negotiating with the United Auto Workers about six factories that it intends to close, Mr. Henderson said, and it is negotiating with both the UAW and Canadian Auto Workers about concessions.

The company also plans to notify dealers later this week about its plans to reduce their ranks by about 2,600 by 2010. The company has 6,246 dealerships, many of which are not profitable because of lower sales volumes.

Mr. Henderson said GM has said the number of parties interested in its Hummer brand has dropped to two from three, and he expects a decision by the end of May. For GM’s Swedish Saab unit, there are a number of interested parties, he said, adding that a resolution will take a month or two.

GM cannot modify its stock exchange offer to bondholders because the company has been told by the Treasury Department that it cannot go above 10 percent of the company’s equity, Mr. Henderson said.

A committee representing the bondholders has counteroffered, seeking a 58 percent ownership stake.

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