WASHINGTON, May 22 – The US government is readying to steer General Motors into bankruptcy with a plan to fund the ailing automaker with tens of billions of dollars in extra public financing, the Washington Post said Thursday.
Under the plan the auto giant would get some 30 billion dollars in extra federal loans, the newspaper said, citing unnamed industry sources. The move would push the company\’s federal debt to some 45 billion dollars.
The Post report comes as General Motors was scrambling to get concessions from the powerful United Auto Workers union, as the June 1 deadline to prove its viability approached, after which government aid would be cut off.
The UAW said Thursday it had reached a "tentative understanding" with GM and the US Treasury on contract changes aimed at averting bankruptcy.
A GM bankruptcy would swiftly come on the heels of fellow automaker Chrysler\’s bankruptcy filing, with the administration of President Barack Obama taking on drastic measures to force the automakers to restructure.
Fears that a bankruptcy would prompt business failures throughout the country are rampant for GM suppliers, the Post said.
The UAW said it would want ratification complete before the June 1 deadline imposed by the Treasury, meaning the company and the union had to come to terms this week.
The changes to the GM pact are believed to be similar to the concessions the union has already approved in earlier negotiations with Chrysler and Ford.
GM is currently funding its operations with more than 15 billion dollars in emergency government loans.
In late March, President Barack Obama gave GM another 60 days to come up with a "more aggressive" cost-cutting plan to keep government funding and avert bankruptcy.