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GM chief says bankruptcy is avoidable

By Tom Krisher
Associated Press / May 5, 2009
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DETROIT - With just a month left to check off an almost insurmountable list of restructuring moves, General Motors Corp.'s new chief executive says it's possible the company can finish everything and avoid following Chrysler into bankruptcy.

But don't think Fritz Henderson, who took over when Rick Wagoner was ousted by the Obama administration, is ignoring what's going on with Chrysler LLC in front of a bankruptcy judge in New York.

"Our preference is to accomplish our goals outside of the bankruptcy process," he said yesterday. "But if we're going to go through one, then we're going to learn from Chrysler's experience."

Henderson also said a counteroffer from bondholders made last week is unacceptable because it doesn't meet government requirements. A key issue for GM is getting 90 percent of its bondholders to accept a debt exchange offer. GM is offering them a 10 percent stake in the company if they give up $27 billion in unsecured debt, but the bondholders have counteroffered, seeking a 58 percent ownership stake.

Henderson essentially rejected the counteroffer, saying the Treasury Department says it can't give more than 10 percent equity to the bondholders.

The nation's largest automaker faces a June 1 deadline to finish restructuring or be forced into Chapter 11 bankruptcy protection.

To finish, it must cut its bond debt, cut labor costs, and thin itself down to the point where the government believes it can be competitive.

GM said last week it would soon disclose six more factory closings in North America but did not identify them.

GM is just starting to resume bargaining in earnest with the United Auto Workers union for a concession agreement.