Right now labor is the smaller end of the problem for GM. The bigger problem "at this moment" is that bond holders are thinking that GM and the Government are bluffing about letting GM go bankrupt. As a result, they are not willing to write down the value of that debt to 1/3rd of what it currently is. Bond holders are demanding that the debt only be written down by half. The reason for this demand is because UAW, in negotiations with GM, only wrote down the debt by half. The bond holders want the same deal. I can't say that I blame them. However the problem for the bond holders is that if GM does go into Chapter 11, everything they have will become worthless in an instant. As things go down to the wire the pressure is building on both parties to get the job done..
There is also more negotiating with the UAW too. Most of which revolves around writing down more debt.
They have until TUESDAY to get it done or the Feds will recall the 9 Billion in loans and effectively push GM into bankruptcy..
After reading this and other articles, I think Chapter 11 is going to happen. GM will use Chapter 11 to get rid of Saturn, Saab, and Hummer. IMO they could be forced to get rid of Pontiac and GMC as well. IMO a GM with just Chevy, Caddy, and Buick is going to be a vastly stronger company than the current one. Their product portfolio has improved by leaps and bounds. They just need to get rid of the dead weight..
CHICAGO (Reuters) - General Motors Corp, nearing a Tuesday deadline to present a viability plan to the U.S. government, is considering as one option a Chapter 11 bankruptcy filing that would create a new company, the Wall Street Journal said in its Saturday edition.
"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 newspaper said. "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."
Citing "people familiar with the matter," the story said that GM could also ask for additional government funds to stave off a bankruptcy filing.
GM declined to comment, the story said.
General Motors and Chrysler LLC face a Tuesday deadline to file restructuring plans to the government in exchange for receiving $17.4 billion in federal loans.
Automakers have struggled as U.S. auto sales have tumbled amid a recessionary economy. U.S. auto sales in January tumbled to a 27-year low.
GM has been in talks with bondholders and the United Auto Workers union to get an agreement on a restructuring that would wipe out about $28 billion in debt for the auto maker, sources have told Reuters. However, it appears unlikely a deal could be reached by the Tuesday deadline, they said.
GM has already announced plans to cut 10,000 salaried workers worldwide, or 14 percent of its staff, 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 UAW.
In addition, it is trying to sell its Hummer SUV and Swedish Saab brands and is reviewing the status of its Saturn brand.