What was for long the world’s most valuable company is preparing for the possibility of a bankruptcy filing.
General Motors chief executive Frederick “Fritz” Henderson faces a June 1 deadline to come up with a plan to reinvent the company — one that is acceptable to the Obama administration.
Henderson's predecessor and mentor, Rick Wagoner, was pushed out by the administration because his restructuring plan did not go deep enough or fast enough. GM has lost $82 billion over the last four years. Since December 31, it has received more than $13 billion in loans from the U.S. government.
Henderson, whose management team will have to extract concessions from employees and creditors and shed brands and dealers without losing more customers, said Friday that he would prefer to do the restructuring “outside of a bankruptcy process.”
In a conference call with reporters, he said: "It is still feasible to be able to do that .... But obviously the clock is
ticking, so we want to make sure we're ready in the event we need to go through a bankruptcy process, and we will be."
The overriding objective is to accomplish “operational goals, balance sheet restructuring,” Henderson said. “If it can't be done outside of a bankruptcy process, it will be done within one.... Given what we need to get accomplished, I felt several weeks ago that it would be more probable that we would need to go through a bankruptcy process. I certainly feel that way. That continues today."
While it is cutting back in most places, GM says it will continue to grow in China, where its sales rose 25 per cent in March.
How the world has changed. The March figure of automobile sales for China is estimated at 1.1 million, a record. US sales were 8.57 lakh as against 1.36 million a year earlier, according to Autodata Corp.