GM hires lawyers to mull bankruptcy

GM hires lawyers to mull bankruptcy
AFP
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First Published: Fri, Dec 12 2008. 11 36 AM IST
Updated: Fri, Dec 12 2008. 11 36 AM IST
Washington: General Motors Corp. said on Thursday it has hired legal advisers and was considering “all options,” but warned bankruptcy was not a “viable solution” for the struggling US auto giant.
“The GM board of directors has discussed bankruptcy, but when it has done so has not concluded that it was a viable solution to the company’s liquidity problems,” the company said in a statement.
“The board is meeting frequently and monitoring the situation very closely and is committed to considering all options - as is management - and has engaged appropriate advisors for all contingencies.”
GM reiterated its position that “the company’s liquidity issues stem from current financial and credit market conditions and would only be exacerbated by the likely effect of a bankruptcy on customer sales,” it said.
GM, the largest US automaker, has warned it could run out of cash as soon as January and that its failure would have a “catastrophic” impact on the US economy.
The company has appealed for lawmakers to provide billions of dollars in temporary, taxpayer-funded loans, citing severe damage to revenues due to the credit squeeze and market downturn.
A version of a $14 billion bailout bill passed the US House of Representatives this week but faced fierce opposition by Senate Republicans as it headed for a vote late on Thursday.
The Wall Street Journal reported that people familiar with the matter acknowledged that the carmaker had decided in the “last few weeks to hire the outside advisers.”
The paper described the hirings as having “both a practical and political bent,” as any such move by GM would be “one of the largest and most controversial filings in US history.”
GM chief executive Rick Wagoner “still believes the company can’t and shouldn’t file” for bankruptcy, the newspaper said.
The company has said it plans to cut up to 31,500 jobs by 2010 - or a third of its workforce - as part of a restructuring plan aimed at winning billions in government-backed loans.
GM’s sales dropped 41% in November after falling more than 40% in October. Sales in December also are expected to be weak, according to J D Power analyst Tom Libbey.
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First Published: Fri, Dec 12 2008. 11 36 AM IST
More Topics: US | Auto | Company | General Motors | Ford |