According to a report out of Detroit, General Motors has apparently failed to convince enough of its bondholders to trade the debt they hold for an equity share in a reborn automaker. Nowhere near the 90 percent needed to avoid bankruptcy, the automaker appears to be headed for a Chapter 11 filing between tomorrow and the end of the month.
Sources told Reuters that, although the bondholders have until midnight to decide if they are willing to forgive the debt they hold in favor of a share in the automaker, there’s little indication that most of the bondholders will agree to GM’s terms.
The source told the news agency that there was “low single digit” interest from bondholders, who had been offered 10 percent of GM in exchange for forgiving debt.
It thus seems likely that GM will begin taking the necessary steps to file for bankruptcy tomorrow.
“I would say this is a sound rejection of an unsuitable offer,” Pete Hastings, a credit analyst at Morgan Keegan, told Reuters. “I have been saying for some time that this thing was dead on arrival and we were just waiting for the doctor to pronounce it dead. Now that’s happened.”
