What may very well be the inevitable is upon GM and the company is finally acknowledging it. GM is preparing itself for bankruptcy.
According to Reuters, GM is currently conducting an "intense" and "earnest" effort to prepare for the possibility of a bankruptcy filing. Sources close to the troubled Detroit automaker report that GM is considering splitting the company in two, with a "new" GM made up of its more successful brands and operations, while an "old" company consisting of its unprofitable units is splintered off.
A new GM would become unburdened by the huge amount of unsecured debt held by bondholders (estimated at 27.5 billion US dollars), who would lose much of the value of their bonds in the event of a bankruptcy. The new company would still assume some creditor debt and other obligations currently on GM's books, depending on the arrangement reached in the bankruptcy proceeding.
GM's new chief executive Fritz Henderson says he still hopes to spare the company from bankruptcy and restructure without it. But upon becoming CEO recently, Henderson said he would be ready to do it if it became necessary.
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