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Automakers: Crash Test Dummies?

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It looks like bankruptcy might really be in the cards for General Motors, after all. According to a Reuters report a possible bankruptcy plan is currently being discussed for General Motors .

The plan includes quickly forming a new company of the automaker's most profitable parts, while a group of other units would remain under bankruptcy protection for a longer period, a source familiar with the plans told Reuters.

GM also would seek to have a new deal in place with the United Auto Workers union prior to any bankruptcy filing, the source said.

GM warned earlier that there is a rising chance it could file for bankruptcy by June, as the company has 60 days to reach deeper concessions with bondholders and unions after its previous restructuring plan was rejected by the U.S. government as insufficient.

While the automakers would still prefer to avoid bankruptcy, advisers to both GM and Chrysler LLC have been working to prepare for potential bankruptcy filings that would aim to preserve, or sell off, the best parts of the companies

Although some have feared that bankruptcy proceedings could generate unanticipated ripples the news is also being embraced by others. Tom Gardner, the CEO Motley Fool, thinks bankruptcy is the best option for GM as long as its controlled.

He tells Fast Money, “we need orchestrated bankruptcy not the normal bankruptcy process because they won’t make it through." And Gardner adds, "that's what I think ends up happening."

The aim would be to show consumers, taxpayers, and the government that the new GM can survive and compete in the autos sector as a viable company.

Old components of the company not included in the new GM, such as Saturn and Hummer, would remain in bankruptcy over a longer period of time to be sold or wound down, said the Reuters source.

You can see our entire interview with Tom Gardner in the video above.


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Trader disclosure: On Apr 1st, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Macke Owns (GS), (GE), (FAS), (WMT), (AAPL), (MOS); Macke Is Short (BRK.b): Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (NUE), (BTU): Finerman Owns (RIO): Finerman's Firm Owns (MSFT), (RIO): Finerman's Firm Is Short (IJR), (MDY), (SPY), (USO), (IWM), (BAC), (BBT), (WFC): Finerman's Firm Owns (BAC) Preferred: Finerman Owns (BAC) Preferred: Finerman's Firm Owns (WFC) Preferred; Finerman's Firm Is Short (BWA); Finerman's Firm Owns (TDC); Najarian Owns (AAPL) Call Spread; Najarian Owns (BNI) Call Spread; Najarian Owns (C) Call Spread; Najarian Owns (FAS) Call Spread; Najarian Owns (PALM) & (PALM) Calls; Najarian Owns (RIO) Calls; Najaria Owns (SWY) Calls; Najarian Owns (POT) Call Spread; Najarian Owns (XHB) Call Spread; Najarian Owns (CREE) Calls

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