Is the GM Bankruptcy Looming Ahead?

Will General Motors File Bankruptcy? What will happen to the millions of consumers with GM warranties? Will they have recourse under the lemon law? It all may come down to whether or not GM files for Chapter 11.

Americans are waiting with baited breath to see if General Motors will file for Chapter 11 Bankruptcy on June 1, 2009, or whether their efforts to reorganize on their own can stave off the prospect of doing so. On May 21, 2009 GM reported it had reached a tentative agreement with the United Auto Workers to modify its labor contract with GM, removing a major hurdle to GM’s government-mandated restructuring. Reducing union costs are crucial for GM as it tries to shrink its debt before the restructuring deadline. To avoid bankruptcy, GM and Obama’s Auto Task Force still must reach a deal with bondholders to significantly reduce the $27 billion in debt securities owed. GM must convince its lenders (bondholders) to forgive about 90 percent of the company’s debt. GM is currently being kept afloat by $15.4 billion in government loans. Can GM make it before the June 1 deadline? Will the bondholders force GM into bankruptcy? Those are billion dollar questions.This week we should know the answer.