The government is calling the process a "controlled" bankruptcy, The New York Times reported Wednesday.
GM's new chief executive officer, Fritz Henderson, has said the automaker will come through inside court or outside of it. But Tuesday in Detroit, Henderson said the company two months to chart its course.
"By no later than June 1, if we're not able to accomplish this outside bankruptcy, we'll be in bankruptcy," he said.
The good/bad concept would include selling GM's profitable brands to a new company, financed by the government, the Times said. That might include Cadillac and Chevrolet.
Other brand, such as Hummer, would be sold or wound down with the proceeds going to pay GM's creditors.
"This would rank as one of the most, if not the most, complex bankruptcy in history," Stephen Cooper, the Zolfo Cooper founder and former chairman who led Enron through its bankruptcy, told the Times.
2014: NFL Cheerleaders [PHOTOS]
Larry Ellison to step down as CEO of Oracle