The bondholders refused GM's initial proposal to exchange billions of dollars worth of debt for a substantial stake in the company. However, they have accepted a sweetened deal offering up to 10-percent of the stock in a newly formed company, with warrants for up to 15-percent if they agree to sell GM's assets to a new company under bankruptcy protection. If this deal goes through (5pm Saturday deadline), GM would most assuredly file Chapter 11. The U.S. Treasury would stand to receive 72.5-percent of the new shares, UAW retiree health care trust fund would receive 17.5-percent, and the old GM would receive 10-percent.
With Ford right on its heals and Chrysler clinging to the hope that FIAT will purchase them, and lift them out of bankruptcy, there is little to be happy about this week in Detroit besides the Red Wings clinching another Stanley Cup finals. Then again, a clean slate could be just what the Big Three need.