The Obama Administration says it will work with General Motors Inc to see the automaker eventually get a fresh start, promising more aggressive attempts to improve the business and leaving the door open for bankruptcy.
(See President Obama address the nation in a Live Feed.)
“The Administration is prepared to stand by GM throughout this process to ensure that GM emerges with a fresh and promising future,” a U.S. auto task force assigned to oversee the company said.
The U.S. has already provided GM with billions of dollars in emergency loans to help it avoid bankruptcy. In today’s task force report the government said that in their current forms, GM and private carmaker Chrysler LLC were not viable businesses.
Both companies asked for government aid in December and were ordered by the government to create viability plans by February, which the task force had been reviewing.
The government team issuing its assessment today said a new forthcoming restructuring plan would “more aggressively implement significant manufacturing, headcount, brand, nameplate and retail network restructurings.”
“Their best chance at success may well require utilizing the bankruptcy code in a quick and
surgical way,” the task force said. If needed, bankruptcy for GM “would be a tool to make it easier for General Motors and Chrysler to clear away old liabilities so they can get on a path to success while they keep making cars and providing jobs in our economy.
For now, GM will be given additional working capital for 60 days to develop “ a more aggressive restructuring plan and a credible strategy to implement such a plan.
Chrysler will be given working capital for 30 days, and a chance to finalize a deal with European carmaker Fiat. If successful, the U.S. will give Chrysler the $6 billion Chrysler had requested to turn the company around.
“If an agreement is not reached, the government will not invest any additional taxpayer funds in Chrysler, the task force wrote.