GM stock drops

April 14, 2009|By McClatchy-Tribune

General Motors Corp. shares fell as much as 19 percent Monday in the wake of a report that the troubled automaker has been directed by the U.S. Treasury to lay the groundwork for a bankruptcy filing by June 1.

GM's stock, a component of the Dow Jones industrial average, ended the session down 16.2 percent at $1.71 and is now down 47 percent since the beginning of the year.

Members of President Barack Obama's automotive task force are holding meetings and conference calls with GM officials and their advisers in Detroit and Washington, according to The New York Times, with the goal of preparing for a fast "surgical" bankruptcy.

GM has repeatedly stated that it is looking to survive the downturn in the auto industry outside of the courtrooms.

The preparations are aimed at assuring a GM bankruptcy filing is ready if the company fails to reach a deal with bondholders to exchange about $28 billion in debt into equity in GM and to get needed union concessions. However, the bankruptcy plan could hit a snag as key members of an ad hoc committee representing the automaker's bondholders are gearing up for a fight, The Wall Street Journal said in a separate report.

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