TREASURY DENIES GM Bankruptcy Next Week

Update: For what it’s worth a Reuters source at Treasury denies all this, saying there are no plans for a bankruptcy next week.

Probably doesn’t matter.

Original post: This is it!

Barring some last-minute hand-of-god intervention, the fabled American car company GM (GM) will be put into bankruptcy next week.

WaPo confirms that in the span of a few days next week, the Obama administration plans to put GM in bankruptcy while taking the final steps to get Chrysler out of it.

Under the GM draft bankruptcy plan, the company would receive just short of $30 billion in additional federal loans, a source said.

The figure is a starting point in negotiations between the government and the company, the source said, and could change. A cash injection that large would boost the U.S. investment in GM to nearly $45 billion. The timing of the filing is also fluid, and could happen the first week of June.

One unresolved question, the article notes, is the role that the Canadian government will ultimately play in the rescue, particularly considering the company has manufacturing operations up north.

For some crazy reason, Canada isn’t keen on rescuing a company, only to see it ship jobs overseas.

“China isn’t putting up the money, and Mexico isn’t putting up the money,” said Tony Clement, Canada’s Minister of Industry. “But if we’re putting up the money, just as the Americans are, then we have the right to protect our production capacity.”

As you know, the Obama administration apparently accepts the idea that GM can’t be restored to health unless it imports more cars from foreign manufacturing centres — even though that would seemingly undermine the entire point of a rescue, or at least most of it.

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