General Motors executives have been hesitant to move the company into Chapter 11 bankruptcy, but President Obama will likely usher the Detroit automaker into bankruptcy next week. The U.S. government has given GM until June 1 to reorganize or face Chapter 11 bankruptcy.
According to the Washington Post, the federal government will pump another $30 billion into GM during its time under Chapter 11 protection. In addition to the $15.4 billion already loaned to GM, the United States will be into the ailing automaker for nearly $45 billion.
With that large of an investment, the U.S. government will own at least 50 percent of the ‘new’ GM, if not more. That ownership would give the federal government the right to appoint new GM directors, according to Automotive News.
Under the current outline for a GM bankruptcy, the good parts of the company will be sold to an entity led by the U.S. government. Under that scenario the government would forgive most of its $15.4 billion in previous loans, but it remains unclear how the additional $30 billion would be handled.
