U.S. preps GM for 'surgical' bankruptcy

DETROIT, April 12 (UPI) -- U.S. officials are working with General Motors Corp. on a "surgical" bankruptcy filing if GM is unable to reorganize before a June deadline, sources said.

Citing people who have been briefed on the matter, The New York Times reported Sunday that members of President Barack Obama's automotive task force met last week, and plan to continue meeting this week, with GM officials and advisers to prepare for a possible bankruptcy filing by June 1.

GM is trying to negotiate concessions from bondholders and the United Autoworkers Union. The federal government has agreed to extend $13.4 billion in aid to GM.

The plans being discussed in Washington and Detroit are intended to have a bankruptcy filing ready to go if the company cannot reach agreement with bondholders and labor unions, the Times said.

One option being discussed would establish a company that would be able to purchase "good" GM assets quickly in the event of a bankruptcy, leaving the old GM in possession of less attractive assets -- such as unpopular brands, manufacturing facilities and healthcare obligations -- that could be liquidated at a slower pace, the report said.

Under one scenario the so-called good GM could go through a two-week bankruptcy protection process in perhaps two weeks, a source told the Times.

Former GM Chief Executive Officer Rick Wagoner was a longtime holdout against filing for Chapter 11 protection, the Times noted, but his successor, Fritz Henderson, recently told the Canadian Broadcasting Corp. if GM needs "to resort to bankruptcy, we have to do it quickly."