It appears the resignation of GM CEO Rick Wagoner was just the tip of the iceberg. New reports indicate President Barack Obama will give General Motors just 60 days to completely restructure. Meanwhile, the administration has determined that Chrysler cannot survive as an independent company, and must partner with Fiat within 30 days or be forced into Chapter 7 bankruptcy liquidation.
Administration sources told the Associated Press the “viability plans” submitted by Chrysler and General Motors earlier this year were completely inadequate. The companies were recently given a short deadline to convince the White House they were worth saving, and they reportedly failed in this effort, too.
In an announcement scheduled for 11:00 a.m. ET Monday morning, Mr. Obama is expected to announce a 30-day window of opportunity for Chrysler to seal a deal with Italian automaker Fiat, which previously expressed an interest in Chrysler. If a deal is made, the U.S. government will offer up to $6 billion in loans. If an agreement cannot be reached, all funding to Chrysler will be cut off, at the company will be forced to liquidate.
Meanwhile, General Motors must completely restructure within 60 days. The ouster of CEO Rick Wagoner is only a part of that plan. Most of the company’s board of directors will also be replaced. The Administration is offering GM 60 days of operating funds in order to reach viability. GM will likely have to negotiate massive union concessions and debt reductions in order to avoid bankruptcy at the end of the 60 day period.
