GM's CEO: Bankruptcy Possible Before 60-Day Deadline
General Motors's newCEO, Fritz Henderson, said the automaker could file for bankruptcy before the end of the 60 days the government has given GM to restructure itself.
Speaking at a press conference in Detroit, Henderson said if agreements can't be reached with the unions, bondholders and other parties, a decision on bankruptcy would be made in consolation with the Obama auto task force.
"We have 60 days and I think if it's going to get done out of court it can get done in 60 days, said Henderson. "Other than that, more time isn't going to help the process."
"We'll review the unsecured debt, pensions and retiree health care obligations," Henderson said to reporters, "and see what we can work out."
Henderson said that more of the automaker's plants could close as part of GM's effort to meet the new requirements for government aid.
That's beyond the five plants the company said it would shutter when it submitted a restructuring plan to the government last month.
Henderson also said there was no decision yet on the future of the Hummer.
"We are now within weeks of making a judgment—are we gonna have a sale or not?" said Henderson. "I think certainly this is measured in weeks or days, not necessarily months at this point."
Henderson also said that the future of the Saturn was also being discussed, but that will take more time to determine.
Henderson was named CEO after the government forced the ouster of Rick Wagoner on Sunday. President Obama on Monday gave GM 60 days to come up with a new restructuring plan in order to receive more federal aid. Chrysler, meanwhile, was given 30 days to complete a merger with Italy's Fiat because it was not considered viable as a stand-alone company.
Attending the press conference with Henderson were GM CFO Ray Young and Marketing vice president Mark LaNeve. The company announced a new customer effort called the "total confidence program."
The plan will provide protection for customers in financial difficulties. GM will cover payments for those GM car buyers for up to 24 months, according to LaNeve.
GM will make up to nine payments of $500 each to qualifying customers. Consumers must qualify for state unemployment to be eligible for the program. The program starts April 1 and runs until April 30.
LaNeve said the government was fully aware of the incentive program.
Meanwhile, a White House advisor Tuesday called for sacrifices by GM bondholders for restructuring the company to avoid bankruptcy.
"We've been facing this dynamic with the bondholders in which they've been holding out on some things on the presumption that, well, maybe the government will just keep bailing us out whenever we run out of money," Austan Goolsbee, a member of the White House Council of Economic Advisers, told CNBC television. "That's just not going to happen. They're going to have to make some sacrifices."
"If they're wanting to play chicken that seems like a bad idea," said Goolsbee, a member of the administration's taskforce on auto restructuring.
The committee representing GM bondholders and its advisers convened a conference call Monday to discuss the next steps for the automaker's debt restructuring, a person familiar with the matter said.
The meeting of bondholders came hours after the U.S. officials rejected the automaker's turnaround plan, saying it did not go far enough to reduce debt and that bondholders were blocking progress on a more sweeping restructuring.
GM has offered bondholders 8 cents on the dollar in cash, 16 cents on the dollar in new, unsecured debt; and a 90 percent stake in the automaker, said a second person with knowledge of the discussions who asked not to be named because of their confidential nature.