http://www.earthtimes.org/articles/show/270626,gm-bondholders-reject-debt-offer--bankruptcy-pending--summary.html

New York - US carmaker General Motors on Wednesday said its bondholders had refused a last-gasp compromise solution to settle their claims, making bankruptcy a virtual certainty. GM, the largest US auto manufacturer, said that its offer to swap bonds worth 27 billion dollars for a 10-per-cent share of equity was less than what bondholders wanted. The company's board of directors were meeting to discuss their "next steps."

The US government, which has provided the Detroit-based giant with 19.4 billion dollars in loans, has given the company until June 1 to prove its viability or file for bankruptcy.

A GM bankruptcy would follow the path of another US auto icon, Chrysler, which filed for protection from its own creditors last month.

Chrysler is hoping a New York court later Wednesday will force a deal with its bondholders and back its plan for an alliance with Italian firm Fiat. That could pave the way for an exit from bankruptcy as early as next week, according to financial news agency Bloomberg.

GM did succeed in another aspect of its massive restructuring efforts: The company spun off its European operations on Wednesday, transferring all holdings into German subsidiary Opel, which is to be placed in a trusteeship by the German government until a new owner is found.

President Barack Obama's administration is already preparing to help GM reorganize while in bankruptcy. A tentative plan would give the government a 70-per-cent stake in the firm in exchange for another 30 billion dollars in funding, US media reported. The Canadian government would provide another 9 billion dollars.

GM chief executive Fritz Henderson has said bankruptcy is "probable" despite his company's last-minute efforts to find an outside solution. White House spokesman Robert Gibbs on Tuesday said talks would continue until "right up against" the June 1 deadline.


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So Obama wants the government to run the banking, automotive, and health care industries? Come on....

Socializing GM completely would be better than this mess.

Then again, so would letting the market clear itself.