General Motors has only been in bankruptcy for a few days, but the Detroit automaker expects to exit its Chapter 11 protection rather quickly. Although many industry experts are calling for GM’s bankruptcy process to take much longer than Chrysler ’s, GM is confident it can emerge from Chapter 11 protection in as little as two months.
Under President Obama’s quick and surgical bankruptcy plan, GM is expected to emerge from bankruptcy in 60 to 90 days. However, GM believes its restructuring will be on the earlier end of that scale, with the company emerging in just two months, according to The Detroit News.
Part of that accelerated process is due to GM’s work in the days leading up to its Chapter 11 filing. Before declaring bankruptcy, GM was able to ink a landmark deal with the United Auto Workers. The new agreement, which was ratified just last week, will save GM up to $1.3 billion a year through lower wage rates and retiree benefits.
Additionally, GM was also able to win over some concessions from its major lenders prior to its Chapter 11 filing. About 20 percent of GM’s major bondholders agreed to swap their debt for equity in the ‘new’ GM, making the path to exit bankruptcy that much easier. The federal government’s $30.1 billion investment in GM will also go a long way in helping the ailing automaker back on its feet.
It remains to be seen if all the parts will come together to let GM emerge from bankruptcy in just 60 days, but the proposition looks highly plausible at this point.
