General Motors Won't Meet Debt Payment

General Motors (GM) said today that it will fail to meet its $1 billion debt payment due on June 1. CNN reports:

“The debt is due the day after GM’s government-imposed May 30 deadline to have an aggressive restructuring plan in place or be left to face bankruptcy.

“GM said it wouldn’t make the June 1 payment because as part of its restructuring, the company will be offering to exchange bondholder’s debt for equity in the company.

‘We’re going to have an exchange offer open anyway,’ said GM spokeswoman Julie Gibson.

“A press representative for GM bondholders was not immediately available to comment.

“While GM CEO Fritz Henderson has said that bankruptcy has become “more likely” in recent weeks, he has also said that an out-of-court restructuring remains a viable option.”

Sorry Fritz, but I’m not so sure you’re right on that. I don’t see how GM can avoid bankruptcy now. I’ve written a lot about GM’s woes (see here, here and here).

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