While Chrysler ’s creditors are preparing a counteroffer to help the Michigan automaker avoid bankruptcy, General Motors’ bondholders are bracing for the worst. No progress has been made between GM and its creditors, with the latter preparing for a bankruptcy scenario.
A source familiar with the situation revealed to Automotive News that it is looking “less likely” that GM will be able to sidestep some form of bankruptcy. Moreover, many creditors are wary of the so-called â€surgical’ bankruptcy scenarios being discussed.
“Bankruptcy court is a big unknown, and saying that we’ll be in and out within two months doesn’t sit right,” an inside source told Automotive News. “The goal is to have an honest negotiation and that’s what we’re holding out for.”
In fact, several bondholders have already begun reviewing which courts would be most favorable to stakeholders. Michigan courts have already been ruled out – due to a perceived â€home field’ advantage – with bondholders eyeing courts in New York and Delaware.
