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May 27th, 2009
11:06 AM ET

GM moves step closer to bankruptcy

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Chris Isidore
CNNMoney.com senior writer

General Motors said Wednesday that it has fallen far short of the bondholder support it needed for its proposed debt-for-stock offer, virtually guaranteeing that the nation's largest automaker will be forced to file for bankruptcy court protection within the next five days.

The bondholders were not satisfied with the prospect of owning only 10% of the company when the U.S. government would own nearly 70% and a union-controlled trust fund up to 20%.

The bondholders own $27 billion in corporate notes. GM (GM, Fortune 500) needed owners of 90% of those bonds to accept stock in return for the debt in order to reduce its interest expenses to a more manageable level.

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Filed under: 360° Radar • auto bailout • Economy
soundoff (9 Responses)
  1. Karen

    Why do people want FORD to deal with zombie companies.

    If GM and Chrysler are propped up by the government, it will make it harder for Ford to compete.

    LET GM and and CHRYSLER FAIL!!!!!!!!!!!!!!!!!!!!!

    May 27, 2009 at 5:09 pm |
  2. pamela

    Where are the vehicles we use in Iraq and Afganistan made? or for that matter any of our military vehicles. Why wouldn't the government give contracts to make those vehicles to the used to be "Big Three" . Didn't we do that during WWII ?? It seems to me we could put more Americans to work if we stopped sending our manufacturing overseas. Then we wouldn't need government stimulus to increase the deficit.

    May 27, 2009 at 3:38 pm |
  3. Michael C. McHugh

    I think it just shows that it's hard to have a hybrid of a nationalized, government-owned company along with private shareholders. The latter should just be paid off and removed from the equation, so these companies can reemerge as publicly-owned, with the UAW as a partner. I do not want to lose any more jobs than necessary, though.

    May 27, 2009 at 1:43 pm |
  4. JC- Los Angeles

    Why President Obama chose to leave his fingerprints on GM with the removal of Rick Waggoner is anyone's guess.

    Spearheading a foreign company like Fiat's acquisition of Chrysler is equally mind-numbing.

    While Barack Obama surely left no fingerprints in his ascent to the White House, it's apparent his gloves have come off now that he's in office.

    May 27, 2009 at 1:02 pm |
  5. Josh Sammons

    It is unfortunate that government policies, especially during the last thirty years, have allowed for greed and wealth to take down strong corporations like this automobile giant. After GM files for bankruptcy, wealthy executives will be compensated well, while the union will be broken and the laborers will be left stuggling. Us as Americans have to assume some responsibility, because we as a people have voted in politicians who favor the wealthy's interest.

    May 27, 2009 at 12:26 pm |
  6. SLM

    Time to file bankruptcy, reorganize without UAW controlling them. This is what happens when Unions take over business.

    May 27, 2009 at 12:26 pm |
  7. Diane O

    Good. Get the current management out of there. They haven't known how to run a profitable company for a long time. Get some new people in there that can build a dependable automobile and restore the confidence in american cars. The problem has been that the unions have been sucking the company dry and building a poor product. We need to learn from the foreign car makers. They don't pay outrageous salaries and benefits to people with no higher education.

    May 27, 2009 at 12:10 pm |
  8. Scott Stodden

    Its such a shame that these billion dollar companies such as GM & Chrysler have to file bankruptcy. I want to know with all these cars people have bought throughout all these years, where the hell did all the money go, what about all these people's jobs?

    Scott Stodden (Freeport,IL)

    May 27, 2009 at 12:03 pm |
  9. Cindy

    GM might as well go ahead and file bankruptcy. I mean there's no use fighting the inevitable. We all can see that is exactly where they are heading. There is no help or hope for them. They just need to do it and get it over with and move on.

    Cindy...Ga.

    May 27, 2009 at 11:08 am |