General Motors CEO Fritz Henderson sees bankruptcy as probable for the Detroit automaker, but the company achieved a major milestone on Thursday, agreeing to a new contract with the United Auto Workers Union and the U.S. Treasury. GM must submit a new viability plan to the U.S. government by June 1st or face Chapter 11 bankruptcy.
Although details of the new deal remain scarce, it reportedly focuses on the UAW’s Voluntary Employee Beneficiary Association, according to Automotive News. Chrysler has recently moved to fund its VEBA requirements with equity in the ‘new’ Chrysler, so GM’s plan likely follows the same blueprints.
The plan still has to be voted on by GM union members, but the motion is expected to pass in the coming days.
The news of the agreement comes just days before GM’s June 1 deadline for restructuring. One of the pillars of GM’ restructuring hinges on further concession from the UAW, but the latest deal doesn’t necessarily mean the ailing automaker will sidestep bankruptcy – GM must also convince its lenders to forgive about 90 percent of the company’s debt. GM is currently being kept afloat by $15.4 billion in government loans.
