General Motors faces a Tuesday deadline to present a viability plan to the U.S. government as a condition of the loans it has been given; according to the WSJ (sub. required) one option it is weighing is Ch. 11 bankruptcy.
In fact, General Motors will offer two alternatives to government regulators: billions more in bailout money, or financial backing as part of a Ch. 11 bankruptcy filing, people familiar with GM's thinking told the WSJ.
One plan includes a Chapter 11 filing that would assemble all of GM's viable assets, including some U.S. brands and international operations, into a new company. The undesirable assets would be liquidated or sold under protection of a bankruptcy court. Contracts with bondholders, unions, dealers and suppliers would also be reworked.
According to the paper, Treasury Department officials believe GM needs at least $5 billion more in U.S. loans to keep operating beyond the first quarter.
GM has already announced plans to cut 10,000 salaried workers worldwide, impose pay cuts for most remaining white-collar U.S. workers and has offered buyouts to its 62,000 U.S. workers represented by the United Auto Workers (UAW).
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