GM Faces Bankruptcy

Summary: Carmaker giant General Motors is facing possible bankruptcy as it has no way to resolve its unsecured claims, debts, and liabilities worth billions of dollars.

Because the company is sinking from debts, it informed the government that its $44 billion liabilities must be removed to pave way for a smoother operation next year.

Few days ago, Chrysler LLC filed bankruptcy following record-low sales and weak consumer demand. Now, another carmaker giant, General Motors, is facing the same fate if the company officials and shareholders will decide if bankruptcy is inevitable.
 

The likelihood of bankruptcy is possible. As GM officials and shareholders have not yet resolved the $27 billion unsecured claims, and the government’s June 1 deadline to settle the issue is fast approaching, analysts said that GM may file for bankruptcy to dissolve its debt.

Meanwhile, the administration has placed Chrysler under court protection in an effort to safeguard the worker’s health benefits. The carmaker giant initially proposed to usea the union’s health care fund to lift its finances, making 55 percent of the company’s stocks owned by its workers.

According to some analysts, another reason why it is possible for GM to file bankruptcy is that its shareholders and company officials have no other contingency plan beyond filing for bankruptcy protection that will dissolve its debts and allow the carmaker to restructure its business.

GM officials declined to give comments regarding the bankruptcy issue.

The Earlier report said GM informed the government that its $44 billion debts and liabilities must be removed—this includes the $10 billion federal aid—to allow the company to continue its operation next year.