GM Told to Prepare for Chapter 11 by June 1st

The first nail in GM's coffin was hammered by the US Treasury Department yesterday, as it told General Motors to prepare for Chapter 11 filling by June the 1st, the date when the new deadline set by the US government comes to an end, despite the manufacturers hopes it can reorganize outside of court, according to a New York Times report cited by Reuters.

The newspaper says sources familiar with the proceedings state that GM is to prepare for a fast "surgical" bankruptcy, under the cover of both Chapter 11 provisions. Treasury officials are looking into an even more viable option, using $5 billion to $7 million federal financing to enter and exit bankruptcy in as little as two weeks.

It would seem that bankruptcy will be the only possible ending for GM. The goal is, as we said earlier, to split the American manufacturer into a "good" GM and a "bad" one. Steps towards this goal were taken these days as well, as rumors surfaced that a new company will emerge after bankruptcy holding all of GM's "good" assets. No word yet as to what the faith of the other brands will be.

"There are a lot of constituents right now that have some dibs on the assets. The bankruptcy has to deal with each of those and make sure that whatever comes out is reasonable. This is not a done deal. We want to do something that would be done quickly. The question is, is that the quickest way to do it? And we're looking at that," Kent Kresa, GM chairman said in the beginning of the month.

The New York Times report has not been commented on by neither GM nor US Treasury Department officials.