GM Is Back and So Is Bob Lutz!

Article from The AP

GM exits bankruptcy; CEO vows better performance

DETROIT – General Motors completed an unusually quick exit from bankruptcy protection on Friday with ambitions of making money and building cars people are eager to buy.

Once the world's largest and most powerful automaker, new GM is now leaner, cleansed of massive debt and burdensome contracts that would have sunk it without federal loans.

But GM, whose 40 days under court supervision was far shorter than anyone predicted, faces the worst auto sales slump in a quarter-century.

At a news conference, CEO Fritz Henderson said the revamped automaker will be faster and more responsive to customers than the old one. It will generate cash and repay $50 billion in government loans ahead of a 2015 deadline.

The new company will build more cars and trucks that consumers want and launch them faster than in the past, the CEO said. GM also announced a partnership with online retailer eBay to test auctioning vehicles online.

"We recognize that we've been given a rare second chance at GM, and we are very grateful for that. And we appreciate the fact that we now have the tools to get the job done," he said.

Known for its sluggish decision-making process and bloated management ranks, GM will create a single, eight-member executive committee to speed up day-to-day decision-making, replacing two senior leadership forums.

Henderson said General Motors Corp. will streamline its bureaucratic management structure, cutting U.S. salaried employment by 20 percent, or 6,150 positions, by the end of 2009. The cuts include 450 executive jobs.

Henderson, who was promoted to chief executive in March, will run the global company and oversee its North American operations. GM's former chief operating officer, Henderson was chosen when President Barack Obama said former CEO Rick Wagoner's restructuring plans didn't go far enough.

Top executives at the new company will focus on business results, new vehicles, brands and consumers.

Bob Lutz, a legendary industry executive, was "unretiring" to become a vice chairman responsible for creative elements of products, marketing and customer relationships, Henderson said. Lutz had previously planned to retire at the end of the year after more than four decades in the auto business.

Nick Reilly, who has served as GM's Asia-Pacific president, will become executive vice president of GM's international operations based in Shanghai, China.

The new company will focus on customers, cars and culture.

"If we don't get this right, nothing else is going to work," Henderson said at GM's Downtown Detroit headquarters. "Business as usual is over at General Motors."

The automaker is launching a "Tell Fritz" Web site to allow owners and the public to share their concerns with senior management, and Henderson plans to go out on the road every month.

He said GM will partner with eBay in California to allow consumers to bid on vehicles just as they would in a typical eBay auction. They could also choose a "Buy it Now" option in an experiment to make car shopping easier. Dealers would still distribute the cars.

"As a culture, General Motors needs to be prepared to experiment and adjust," he said.

New Chairman Edward Whitacre Jr. said GM's trip through bankruptcy protection had been extremely challenging. "There have been a lot of long hours, there have been a shuttering of plants, there have been painful layoffs."

Whitacre cited the "strong leadership" of Henderson and the management team, giving the CEO a vote of confidence.

The company's logo will remain blue with white underlined GM letters, although the company had considered changing the background to green to symbolize an environmental focus. GM has no plans to change the background, Henderson said.

He said the U.S. government, which owns a majority stake in GM, has vowed that it would not get involved in day-to-day decisions.

GM received $19 billion to $20 billion more in federal aid on Friday, the remainder of the $50 billion it will receive, Henderson said. A large part of the money will be held in escrow.

GM, in a viability plan presented to the government, said it would break even before interest and taxes next year, and be slightly above break-even for 2011 on a pretax basis.

"Sitting here today, I don't have any reason to disbelieve those numbers," Henderson said, giving no details of when the company would make a net profit.

Turning a profit will not be easy. GM has piled up losses and survives only because of government loans.

Besides the U.S. government's 61 percent controlling interest, the United Auto Workers union gets a 17.5 percent stake of the company through its retiree health care trust, and the Canadian government will control 11.7 percent. The remaining shares went to bondholders of the old company.

Concessions made by the United Auto Workers union just before the company entered bankruptcy protection have brought GM's labor costs down to where they are fully competitive with Toyota Motor Corp., Henderson said.

The parts of GM not moving to the new company will become part of "old GM," a collection of assets and liabilities that will be sold to pay creditors.

Ken Thomas reported from Washington, D.C.. AP Auto Writer Kimberly S. Johnson and AP Business Writer Jeff Karoub in Detroit contributed to this report.

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GM gets go-ahead on bankruptcy financing

NEW YORK – General Motors Corp. won approval today to use up to $33.3 billion to pay for its bankruptcy today, after making a few changes to settle technical objections.

The step marks another major milestone in GM’s dash through bankruptcy court, which it and Obama's auto industry task force hope to complete with the creation of a new, government-owned GM by the end of the month.
The financing was approved by U.S. Bankruptcy Judge Robert Gerber in a matter of minutes after Harvey Miller, GM’s lead bankruptcy attorney, said the company had made some small changes to settle concerns of creditors and local governments.

About $30.1 billion of the money comes from the U.S. Treasury, with the additional money coming from the Canadian government.

The U.S. Treasury also added a clause that Gerber accepted stating it was legal for the government to pay for GM’s bankruptcy using money from the $700-billion financial industry bailout. That had been a legal objection raised unsuccessfully by Chrysler LLC investors opposing its bankruptcy plan.
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Bankruptcy Judge Ok's The Sale Of Chrysler To Fiat

A bankruptcy judge approved the sale of substantially
all of U.S. automaker Chrysler's assets to a group led by
Italy's Fiat SpA(FIA.MI) in an opinion filed late on Sunday. Chrysler's bankruptcy, also financed by the U.S. Treasury,
has been widely seen as a test run for the much bigger and more
complex reorganization of GM. The GM plan as detailed by U.S. officials is for a quick
sale process that would allow a much smaller GM to emerge from
court protection in as little as 60 to 90 days. "Now the hard part begins, which is making GM and Chrysler
competitive.

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General Motors Corp will file for bankruptcy

DETROIT/WASHINGTON, June 1 (Reuters) - General Motors Corp
(GM.N) will file for bankruptcy later on Monday, U.S. officials
said, forcing the 100-year-old automaker once seen as a symbol
of American economic might and dynamism into a new and
uncertain era of government ownership. The planned filing, confirmed by Obama administration
officials, would be the third-largest in U.S. history and the
largest-ever U.S. manufacturing bankruptcy. The decision to push GM into a fast-track bankruptcy, and
provide $30 billion of additional taxpayer funds to restructure
the automaker is a huge gamble for the Obama presidency. But in a sign of progress in the government's high-stakes
effort, a bankruptcy judge approved the sale of substantially
all of U.S. automaker Chrysler's assets to a group led by
Italy's Fiat SpA(FIA.MI) in an opinion filed late on Sunday. Chrysler's bankruptcy, also financed by the U.S. Treasury,
has been widely seen as a test run for the much bigger and more
complex reorganization of GM. The GM plan as detailed by U.S. officials is for a quick
sale process that would allow a much smaller GM to emerge from
court protection in as little as 60 to 90 days. "Now the hard part begins, which is making GM and Chrysler
competitive. If they don't do that, then we'll be doing this
all over again in a few years," said Christopher Richter, auto
analyst at CLSA Asia-Pacific Markets in Tokyo. "The immediate implication is that the companies are going
to get smaller and so market share is up for grabs, which means
that rivals like Toyota (7203.T), Honda (7267.T), Nissan
(7201.T) and Hyundai (005380.KS) are going to gain share." LIFELINE Since the start of the year, GM has been kept alive with
U.S. government funding as a White House-appointed task force
vetted plans for a sweeping reorganization that will be
undertaken with $50 billion in government financing. By preparing to take a 60 percent stake in a reorganized
GM, the Obama administration is gambling that the automaker can
compete with the likes of Toyota Motor Corp after its debt is
cut by half and its labor costs are slashed under a new
contract with the United Auto Workers union. The governments of Canada and the province of Ontario
agreed to provide another $9.5 billion to GM in a late addition
to the plans for the bankruptcy that have been taking shape for
weeks, U.S. officials said. [ID:nN31418487] GM plans to close 11 U.S. facilities and idle another three
plants. It has not provided an updated target for job cuts but
had been looking to cut 21,000 factory jobs from the 54,000 UAW
workers it now employs in the United States. The UAW would have a 17.5 percent stake in the "new GM."
The Canadian government would own 12 percent stake and GM
bondholders would get 10 percent. RELUCTANT INVESTOR Officials involved in the planning for GM said the White
House was a "reluctant investor" in GM but had to prevent a
liquidation that analysts say would have cost tens of thousands
of jobs at a time when the economy is mired in recession. GM alone employs 92,000 in the United States and is
indirectly responsible for 500,000 retirees. "We want a quick, clean exit as soon as conditions permit,"
Treasury Secretary Timothy Geithner told students at Peking
University in Beijing. "We're very optimistic these firms will
emerge without further government assistance." Analysts said that while there were large risks to the
Obama administration's approach, it had at least succeeded in
pulling GM back from the brink of collapse. [ID:nN31400726] "I think they have a much greater chance of emerging as a
healthy company now than they did just six months ago," said
Aaron Bragman, an analyst at IHS Global Insight. "Nobody gave
them any possibility of emerging as a whole company." President Barack Obama is due to speak on the auto industry
shortly before noon Eastern time on Monday. A news conference
by GM Chief Executive Fritz Henderson will follow. U.S. officials said there was no plan to provide any
further funding for GM and insisted that all of the Detroit
Three could survive. Ford Motor Co (F.N) has not sought
emergency federal aid. "We do believe, and completely endemic in the president's
decision, was a belief that this country can support three
domestic successful viable auto companies," a senior Obama
administration official said. In the case of GM, the goal of restructuring is to allow it
to return to profitability if U.S. industry-wide auto sales
recover even slightly to near 10 million on an annual basis. Until now, GM had counted on a recovery to the
16-million-unit mark the industry last saw in 2007 in order to
stop losing money, officials said. Even if GM and Chrysler emerge swiftly from bankruptcy this
summer, the autos task force will stay in business -- shifting
to an investment management role. Senior administration officials said on Sunday there was
plenty to keep the task force staff busy, monitoring the
government's stake of about 60 percent of GM, and less than a
10 percent stake in Chrysler. [ID:nN31418995] The task force is led by Wall Street investment banker
Steven Rattner and labor negotiator Ron Bloom, and includes top
White House adviser Lawrence Summers and U.S. Treasury
Secretary Timothy Geithner. CAREFULLY ORCHESTRATED FAILURE GM's bankruptcy is the most carefully orchestrated Chapter
11 filing in the history of American business. The automaker's final descent started with President George
W. Bush administration's emergency aid announcement on Dec. 19
and accelerated in late March when the new Obama government
gave it 60 days to restructure. While the "new GM" is expected to emerge quickly from court
protection, its shuttered plants, stranded equipment and other
spurned assets would be left to liquidation in bankruptcy. Al Koch, a managing director at advisory firm AlixPartners
LLP, will be appointed chief restructuring officer in charge of
liquidating those GM assets. [ID:nN31395352] A veteran restructuring adviser, Koch has had prominent
roles in Kmart Corp's restructuring and other turnarounds. Over the weekend, GM won support from investors
representing 54 percent of its $27 billion in bondholder debt
offered their support for the U.S. government's plans.
[ID:nN31329833] Bondholders could take up to 25 percent of GM if it
recovers to be worth what it was in 2004. The bondholders' support does not ensure court approval but
gives the company an important symbolic victory that bankruptcy
experts and analysts say will help GM's case. In the past week, GM has also concluded an amended
agreement with the United Auto Workers union under which the
UAW will receive a 17.5 percent in a restructured company and
other debt and preferred stock instead of $20 billion in cash. Founded in 1908, GM rose to dominate the U.S. and global
auto industries under the stewardship of pioneering chief
executive Alfred Sloan, who famously pledged that the automaker
would deliver "a car for every purse and purpose." By the mid-1950s, at the peak of its success, GM had some
514,000 employees. It accounted for about half of U.S. car
production and its sales were twice as large as the No. 2
corporation, Standard Oil. GM's stock fell to 75 cents on Friday, a level last seen
during the Great Depression on what was expected to be its last
trading day before bankruptcy.
(Additional reporting by David Bailey, Soyoung Kim, David
Lawder, John Crawley, Walden Siew and Tom Hals; Editing by
Patrick Fitzgibbons and Ted Kerr)

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Could Chrysler's Bankruptcy Take 2 Years?

(Reuters) - Chrysler's bankruptcy may take as long as two years, instead of the two months that President Barack Obama suggested as a target, Bloomberg said, citing an administration official.

The 60 days projected by Obama at an April 30 press conference announcing Chrysler's bankruptcy only applies to a sale of the automaker's best assets to a new entity, the official told the news agency.

Creditors would then fight over unwanted factories and other assets to recover money, the news agency cited lawyers as saying.

Chrysler has received bankruptcy court approval to proceed with a rapid sale of most of its assets to a new company held by Italy's Fiat SpA, a United Auto Workers union-aligned trust and the U.S. and Canadian governments.

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Chrysler is in court today for bankruptcy hearing

DETROIT – Chrysler's first hearing in a New York courtroom Friday morning may offer the first clue as to whether a quick, "surgical" bankruptcy is possible. The nation's third-largest automaker filed for Chapter 11 bankruptcy protection Thursday with an ambitious plan to emerge in as little as 30 days as a leaner, more nimble company.

After months on government life support, Chrysler is pinning its future on a top-to-bottom reorganization and plans to build cleaner cars through an alliance with Italian automaker Fiat. In return, the federal government agreed to give Chrysler up to $8 billion in additional aid and to back its warranties.

On Friday morning, bankruptcy court Judge Arthur Gonzalez is scheduled to hear the case's first motions, which typically will allow the company to continue paying workers and basic utility costs as it restructures.

Eventually, Gonzalez will have to sort out the key issue that made bankruptcy necessary: the creditors that hold $6.9 billion of the Chrysler's debt.

Four of the largest banks holding 70 percent of the debt agreed this week to a deal that would give them $2 billion. But a collection of hedge funds refused to budge, saying the deal was unfair and would only return a small fraction of their holdings.

President Barack Obama on Thursday chastised the funds for seeking an "unjustified taxpayer-funded bailout" after Chrysler and his auto task force cleared the company's other hurdles. Along with the Fiat deal, Chrysler adopted a cost-cutting pact with the UAW this week.

"They were hoping that everybody else would make sacrifices and they would have to make none," Obama said. "I don't stand with those who held out when everybody else is making sacrifices."

One lender, OppenheimerFunds Inc., said it rejected the government offer because it "unfairly asked our fund shareholders to make financial sacrifices greater than the sacrifices being made by unsecured creditors."

The White House said Chrysler could come out of bankruptcy in 30 to 60 days. Under normal circumstances, it would be difficult to complete such a large bankruptcy so quickly.

But John Pottow, a University of Michigan professor who specializes in bankruptcy, said the government's level of involvement is much greater than in a typical corporate bankruptcy.

"If you have the president of the United States who wants something to happen, I think anything's possible in bankruptcy protection," he said.

In the meantime, Chrysler said it will close all of its plants starting Monday and they will remain closed until the company comes out of bankruptcy. At least three Detroit-area factories sent workers home Thursday after suppliers stopped shipping parts over fears they would not be paid.

"A lot of us are scared," said Steve Grabowski, 33, who has worked at a Warren, Mich., parts stamping plant for seven years and was sent home Thursday. "We knew something like this was going to happen, but we didn't think it would be so soon."

Chrysler CEO Robert Nardelli announced he would step down when the bankruptcy is complete and take a post as an adviser with Cerberus Capital Management LP, which will give up its 80 percent ownership of Chrysler under the automaker's plan. Vice Chairman Tom LaSorda, who once ran the company when it was owned by the German automaker Daimler, said he would retire.

Chrysler's bankruptcy filing is the latest step in a drastic reordering of the American auto industry, which has been crushed by higher fuel prices, the recession and customer tastes that are moving away from the gas-guzzling SUVs that were once big money makers.

The administration has sunk about $25 billion in aid into Chrysler and rival General Motors Corp.

GM faces its own day of reckoning on June 1, a date the administration has set for it to come up with its own restructuring plan. GM has announced thousands of job cuts, plans to idle factories for weeks this summer and has even offered the federal government a majority stake in the company as it races to meet the deadline.

Like at Chrysler, debt may be the stumbling block. GM has asked its unsecured bondholders to exchange $27 billion of debt for a 10 percent stake in the automaker. The creditors balked, saying that would leave them with just pennies on the dollar and that they deserve a majority stake if they give up their claims.

When Chrysler emerges from bankruptcy, the United Auto Workers union will own 55 percent of the automaker and the U.S. government will own 8 percent. The Canadian and Ontario governments, which are also contributing financing, would share a 2 percent stake.

Under the deal, Chrysler would gain access to Fiat's expertise in small, fuel-efficient vehicles. The U.S. automaker eventually wants to build cars that could get up to 40 mpg, far more economical than its current fleet focused on minivans, Jeep SUVs and the Dodge Ram pickup.

In exchange, Fiat would initially get 20 percent of the company, but its share could rise to 35 percent if certain benchmarks are met, and Fiat said Thursday it could get an additional 16 percent by 2016 if Chrysler's U.S. government loans are fully repaid. Fiat would also gain access to the North American market through Chrysler factories and dealerships.

Fiat CEO Sergio Marchionne said he planned to spend time meeting Chrysler's employees and touring its plants over the next few weeks.

He said Fiat was preparing for Chrysler to "re-emerge quickly as a reliable and competitive automaker." Fiat also plans to reintroduce brands like Alfa Romeo in North American markets.

The Fiat deal and bankruptcy cap a disastrous time for Chrysler.

Chrysler lost $8 billion last year and its sales through March were down 46 percent compared with the year-earlier period, leading some auto industry analysts to question whether Chrysler can survive even in bankruptcy.

But company executives told reporters Thursday that Chrysler vehicles with Fiat's fuel-efficient technology should reach showrooms in 18 months.

Vice Chairman Jim Press said Chrysler has cut expenses to operate profitably at a lower sales volume, and he said it would be able to take advantage of Fiat's distribution network to sell more vehicles globally.

Chrysler's LaSorda said in court papers that the automaker started to think about potential alliances as early as fall 2006, when Chrysler was still owned by DaimlerChrysler AG.

In the spring of 2007, LaSorda began negotiations with Nissan-Renault that went through several iterations, and Chrysler also started talks with GM in June 2008. The two companies even studied how much could be saved through a combination, but by November the worsening U.S. economy forced GM to focus on its own liquidity problems.

LaSorda named a number of other carmakers that Chrysler approached, including Toyota Motor Corp., Volkswagen AG, India's Tata Motors, the Hyundai-Kia Automotive Group, Russia's GAZ, Mitsubishi and Honda Motor Co., as well as a number of Chinese automakers. He said it had also approached some suppliers and parts manufacturers.

Despite the turmoil with Chrysler and GM's looming deadline, Obama urged consumers to keep buying cars.

"If you are considering buying a car, I hope it will be an American car," he said.

Stephen Manning reported from Washington. Associated Press writers David N. Goodman in Warren, Mich., Kimberly S. Johnson in Detroit and Vinnee Tong in New York contributed to this report.

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Chrysler News-Chrysler to file for bankruptcy

Chrysler to file for bankruptcy

WASHINGTON – 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, two administration officials said Thursday.

The Obama administration had long hoped to stave off bankruptcy for Chrysler LLC, but it became clear that a holdout group wouldn't budge on proposals to reduce Chrysler's $6.9 billion in secured debt, according to the officials, who spoke on condition of anonymity because the filing plans are not public. Clearing those debts was a needed step for Chrysler restructure by the Thursday night deadline.

Bankruptcy doesn't mean the nation's third largest automaker will shut down. And the privately-held Chrysler is expected to sign a partnership agreement with the Italian company Fiat as early as Thursday as part of its restructuring plan. A Chapter 11 bankruptcy filing would allow a judge to decide how much the company's creditors would get.

President Barack Obama is expected to discuss the nation's auto sector at noon Eastern.

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 Chrsyler'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 were holding out for a better deal.

"While the administration was willing to give the holdout creditors a final opportunity to do the right thing, the agreement of all other key stakeholders ensured that no hedge fund could have a veto over Chrysler's future success," said one of the administration officials.

A third 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.

When it files for bankruptcy, Chrysler would continue operating and Fiat would still sign on as a partner on Thursday, the people said. The government already has promised to back Chrysler's warranties in an effort to allay customers' fears that the automaker wouldn't be around to honor them.

President Barack 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. President Obama said Wednesday night while the lender talks were still ongoing that he was "very hopeful" that deals can be worked out to keep Chrysler LLC a viable automaker, and more hopeful than he was a month ago that the company will stay in business.

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."

Krisher reported from Detroit. Associated Press Writers Ben Feller in Washington, Colleen Barry in Milan, Italy, Kimberly S. Johnson in Detroit and David Eggert in Lansing, Michigan, contributed to this report.

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Auto Task Force: Not Looking to Bankruptcy

President Barack Obama's automotive task force is focused on solving the industry's problems outside of bankruptcy and will likely continue to provide funding long after a pending March 31 deadline, the group's lead adviser told the Detroit Free Press.

Bankruptcy is not our goal," Steven Rattner said in a the newspaper inteview published Monday. "I've been in and around bankruptcy for 26 years as part of my private-sector work. It is never a good outcome for any company, and it's never a first choice."

Rattner also said the panel was committed to meeting the March 31 deadlines specified in loan deals with General Motors(GM Quote - Cramer on GM - Stock Picks) and Chrysler, but decisions on further aid could come later.

"It's entirely possible, in fact I think it's more than likely, that what you will see is not a single announcement at a point in time that's the beginning of the end of our policy efforts for the auto industry, but rather a series of actions over perhaps a reasonably long period of time to solve this problem," he said.

Additionally, Rattner said the task force is seeking ways to help auto- company suppliers survive....More

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GM auditors raise the specter of Chapter 11

DETROIT – General Motors Corp.'s auditors have raised "substantial doubt" about the troubled automaker's ability to continue operations, and the company said it may have to seek bankruptcy protection if it can't execute a huge restructuring plan.

The automaker revealed the concerns Thursday in an annual report filed with the U.S. Securities and Exchange Commission.

"The corporation's recurring losses from operations, stockholders' deficit, and inability to generate sufficient cash flow to meet its obligations and sustain its operations raise substantial doubt about its ability to continue as a going concern," auditors for the accounting firm Deloitte & Touche LLP wrote in the report.

In pre-market trading, GM shares fell 18 percent from Wednesday's close, to $1.80.

GM has received $13.4 billion in federal loans as it tries to survive the worst auto sales climate in 27 years. It is seeking a total of $30 billion from the government. During the past three years it has piled up $82 billion in losses, including $30.9 billion in 2008....More

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Report: $40B in bankruptcy aid sought for GM, Chrysler

Is bankruptcy The Best Answer for GM, Chrysler's survival?

Outside advisers to the U.S. Treasury have started lining up the largest bankruptcy loan ever, talking with banks and other lenders about at least $40 billion in financing for General Motors and Chrysler in case the two automakers need it, the Wall Street Journal reports.

Administration officials said they are trying to find a way to restructure the two companies without resorting to bankruptcy proceedings, and that the latest efforts are "due diligence."

Initial discussions call for private banks to provide the financing, with the government guaranteeing or backstopping the loan. Lenders are reluctant to commit funding to GM or Chrysler for several reasons -- most are concerned they won't get all their money back. The government advisers also are looking at ways the Treasury could "prime" banks making the debtor-in-possession, or DIP, loans, so the government could be paid back before private creditors.

The estimated $40 billion in DIP financing that GM and Chrysler would need would be five times as large as the previous record for such financing, which is used to fund day-to-day operations while companies sort out their debt....More

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Treasury mulls bankruptcy options for GM, Chrysler

Obama administration says that all options - including bankruptcy - are being considered for the struggling automakers.

NEW YORK (Reuters) -- Outside advisers to the U.S. Treasury are lining up contingency financing options for General Motors Corp. and Chrysler LLC as part of a review of restructuring options for the automakers, a Treasury official said on Monday.

The official commented to Reuters after the Wall Street Journal reported that outside advisers to the Treasury were talking with lenders about financing of at least $40 billion for the car companies, in case the two automakers needed it.

People involved in talks with senior administration officials told the paper that the administration believes that the option of Chapter 11 filings by the two automakers needs to be seriously considered.

"Everything is on the table right now," one person involved in the matter told the paper, adding that President Barack Obama does not want to see more massive job losses in the auto industry.

The Treasury official told Reuters that the action is not an indication of future plans for the companies, but is aimed at ensuring all options are properly considered and made available.

The administration also does not want to anger the United Auto Workers union by appearing to push for bankruptcy, the Wall Street Journal report said, citing the person involved in the matter.

The initial discussions call for private banks to provide the financing known as a debtor-in-possession (DIP) loan with the government guaranteeing or backstopping the loan, the paper said.

In this scenario, some of the financing would be used to pay back the $17.4 billion the government lent GM (GM, Fortune 500) and Chrysler late last year, the paper said.

Treasury advisers are handling the effort and keeping GM and Chrysler informed of the steps through back-door channels, the paper said, citing people familiar with the matter.

Recently, government advisers have aggressively courted big lenders Citigroup Inc. (C, Fortune 500) and J.P. Morgan Chase & Co. (JPM, Fortune 500), which have also received government aid, to participate in any bankruptcy financing, the paper said, citing people familiar with the matter.

Last week, GM and Chrysler requested nearly $22 billion in U.S. government loans, on top of $17.4 billion received so far, and said they had reached tentative deals with the United Auto Workers union to reduce labor costs.

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Chrysler Bankruptcy News:Analysts Say Carmakers' plans need more time

From Detnews.Com
March 31 deadline too soon to get bondholders on board with Chrysler, GM changes, they say.
Alisa Priddle and David Shepardson / The Detroit News
As General Motors Corp. and Chrysler LLC are scurrying to put the finishing touches on their restructuring plans due next Tuesday to the Treasury, finance and auto industry experts say submitting plans is one thing, but getting bondholders and all other parties involved in a massive restructuring to agree to those plans by the March 31 deadline seems unrealistic.

Meanwhile, GM CEO Rick Wagoner lobbies key lawmakers in Washington today to ease the way for GM's plan.

"I wouldn't be surprised if the timetable got extended, because clearly the original plan was a temporary fix," said Mark Oline, a Fitch Ratings analyst in Chicago. "It was going to be up to the new Congress and Administration to put in a longer-term solution."

Auto analysts and bankruptcy lawyers say the deadline set out in the federal bailout of the automakers is too ambitious to get bondholders on board in just a few more weeks. They say GM in particular needs an extension to avoid being forced into bankruptcy if it can't show progress on its assignment to cut $27.5 billion of unsecured debt down to about $9.2 billion by the end of March.

The concern centers around GM because the public company has many junk bonds and unsecured creditors, said Judy O'Neill, partner with Foley & Lardner LLP's Detroit office and an expert on Chapter 11 bankruptcy....More

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Will George Bush Require GM and Chrysler To Go Into bankruptcy?

President Bush has said he would help GM and Chrysler with a auto Bridge loan, but what are the details?

I have read every article on the Internet and there are a thousand different variations.

Some are saying the loans will go through by tomorrow and follow the same Bill the House passed. Others are stating The treasury must really look at what the companies need.

I have read the Loans will be only $5 billion all the way to $40 Billion dollars.

An article on WSJ stated they spoke to a source close to the White House and Bush may require GM and Chrysler to go into bankruptcy to receive help!

From(Wall Street Journal)--Two people familiar with the situation said the government is also considering requiring any auto makers seeking aid to file for bankruptcy. Under such a scenario, the money would be used as so-called debtor-in-possession financing. Outside experts said such financing could require $50 billion or more for GM and Chrysler combined.

An article from Bloomberg states Bush wants to keep GM and Chrysler out of bankruptcy, Which is it?

An Article from (Bloomberg)-- President George W. Bush said deliberations by his administration on whether to tap a bank bailout fund to keep General Motors Corp. and Chrysler LLC out of bankruptcy “won’t be a long process” because of the “fragility” of the U.S. automakers

It's the old hurry up and wait....We will eventually find out.

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The Car Czar-GM Chrysler Merger-bankruptcy

Under the purposed deal the " Car Czar " will make all the decisions! The "car czar" will have the power to force U.S. automakers into bankruptcy! He will be incharge of distributing the $15Billion as he see's fit! He could also force the GM Chrysler Merger!

This is the Government taking over GM and Chrysler or the New GM Chrysler Company! Stay tuned this is going to get uglier!

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