GM Must Prepare to File Bankruptcy: Fed
In a New York Times report, the US Treasury Department has urged carmaker giant General Motors to file for bankruptcy in June despite the company's claim that it can restructure itself to prevent financial meltdown.
Meanwhile, the company has already received bailout packages from the government worth 13.4 billion in an effort to keep its finances afloat amid slumping sales.
Initial report said the proposal to file bankruptcy is not a welcoming suggestion for most of GM’s officials who believe that the company’s image should be preserved to avoid stockholders from pulling their shares.
Meanwhile, the carmaker giant and the automotive task force officials are still planning to continue discussions on how to avoid the worst-case scenario which is the total meltdown of the company’s finances.
For the past few months, the government has granted GM with a total of 13.4 billion of bailout package in an effort to keep its finances afloat due to slumping sales and weak consumer demand for cars.
Detroit’s Big Three including GM, Chrysler, and Ford have posted low demand and slumping revenue due to financial slowdown which started last year. Meanwhile, Ford is the only carmaker which did not ask for bailout package from the government since it has successfully prepared itself with contingency plan in line with its cost-cutting measure.
Some experts said that GM and Chrysler have failed to prepare itself from recession that forced these two companies to seek government aid.
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