GM Gets Ready for Bankruptcy

Although US car manufacturers struggle to get through the economic crisis, General Motors acknowledges that things can get even worse and hired a special bankruptcy counsel and restructuring advisers. It may seem like the world's largest car manufacturer prepares for a Chapter 11 bankruptcy filing, just in case the United States Senate does not approve the $14 billion loan request. Earlier this day, US Senate members have confirmed that Detroit 3's funding package has been put on hold until further negotiations.

Getting back to GM's today's move, representatives of the company admitted that the carmaker is currently considering its options, especially when taking into account recent rumors that it may run out of cash as soon as January 2009. "The Board is meeting frequently and is monitoring the situation closely and is considering all options, as is management," GM spokesman Steve Harris told The Detroit News. "And they have engaged appropriate advisors for all contingencies."

General Motors hired Harvey Miller from the New York law firm to be responsible for any bankruptcy related matter. In addition, the American carmaker has appointed restructuring experts Jay Alix, Evercore Partners' William Repko, and Arthur Newman of the Blackstone Group, according to The Detroit News quoting a Journal report.

On the other hand, senators said they're open to talks and an agreement should be reached anytime soon in case the group of Detroit car manufacturers comply with their requirements. But even so, General Motors' and Chrysler's problems may continue in early 2009, with government money likely to keep them on the floating line for a few more months.

The situation is surely more complicated than everyone expected before the apogee of the global recession, but a solution must be found as soon as possible, especially when taking into account the number of US residents the automotive industry currently employs.