U.S. says GM bankruptcy would take at least 60-90 days

WASHINGTON Thu May 28, 2009 7:45pm EDT

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WASHINGTON (Reuters) - The Obama administration estimates that a General Motors Corp bankruptcy would take at least 60 to 90 days and perhaps longer to complete, a senior official said on Thursday.

The official, who spoke on the condition of anonymity because he was not authorized to discuss the matter publicly, would not confirm a specific bankruptcy scenario, but the government's deadline for any filing is on Monday.

President Barack Obama is expected to discuss the automaker's restructuring at that time, the White House said. On April 30, Obama announced that Chrysler was seeking Chapter 11 protection.

The administration is also planning an extraordinary offensive beginning on June 2 of sending senior officials to Midwest communities most affected by job losses and other aspects of GM and Chrysler bankruptcies. Eight Cabinet secretaries and other top officials will visit Ohio, Michigan, Indiana and Wisconsin to discuss federal efforts to help workers.

Chrysler, GM's smaller rival, is on the verge of stepping out of court protection. GM and Chrysler are operating under the direction of a White House/Treasury Department task force, which has provided more than $36 billion in bailout assistance to the automakers and their affiliated finance companies.

The official said GM, a publicly traded company with a global footprint, is more complex than privately held Chrysler and would take longer to reorganize in court, even under the expedited strategy the government has mapped out.

"I think the 60-to-90-day time frame is a better time frame to establish than something that looks like Chrysler," the official said.

GM would be a private company for some time, under the government's restructuring road map, the official said.

A GM spokesman declined comment on the scope of any bankruptcy.

The administration official also said that total new U.S. government aid to GM, including any debtor financing in bankruptcy, would top $30 billion. The Canadian government would also offer some $9 billion.

The U.S. government stands to own more than 70 percent of the new company once restructuring is complete, and the United Auto Workers 20 percent.

GM will also turn over its board, but some members are expected to stay on, the official said.

The task force also expects at least 35 percent of GM bondholders to accept a revised debt-for-equity offer that would give bondholders 10 percent of the reorganized company as well as warrants to buy another 15 percent in equity. Bondholders face a Saturday deadline to respond to the offer.

The official declined to set an acceptance rate the automaker would be comfortable presenting to a bankruptcy judge to speed its restructuring. Success of the offer, the official said, would be a judgment call.

The revised offer, which followed rejection of a lesser proposal on Tuesday that GM had hoped would garner 90 percent support, was endorsed on Thursday by an ad hoc committee of bondholders that own about a 20 percent of GM's debt. The administration expects debtholders representing at least another 15 percent to sign on.

On efforts to find a buyer for GM's European unit, Opel, the official said the U.S. government would continue to participate in discussions "as necessary and appropriate" but the matter was mainly between GM and the German government. Moreover, the official said GM could enter bankruptcy with or without an Opel sale agreement in place.

(Reporting by John Crawley and Rachelle Younglai; Editing by Matthew Lewis and Andre Grenon)

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