'Controlled bankruptcy' mulled for GM
The US government is considering a "controlled" bankruptcy for General Motors that would require approval by some creditors of a plan to break up the troubled automaker, US media said Wednesday.
Carefully monitored by the authorities, the bankruptcy would be "somewhere between a prepackaged bankruptcy and court chaos," The New York Times reported, citing people familiar with the matter.
"Instead of signing on every creditor as is typically required in prepackaged deals, administration officials are using as leverage the promise of taxpayer financing," the newspaper explained.
"The administration appears to be drawing in part from a playbook used with troubled banks, with the goal of creating a new, healthier GM, but leaving behind its liabilities and less valuable assets, perhaps for liquidation."
Under a plan being developed by the government, GM would file for "pre-arranged bankruptcy" and then use a special legal provision to promptly sell off desirable assets -- which could include Cadillac and Chevrolet -- to a new, government-financed company, according to the Times.