GM: Before any bankruptcy, the backlash
The embattled automaker’s drop dead date is Monday, June 1 when it has $1 billion in bond payments due that it plans to skip. Five days earlier, on May 27, GM learns how much of some $27 billion in bonds it was able to retire in exchange for its devalued stock.
Analysts and restructuring experts see little chance GM will meet its target of wiping its balance sheet almost clean of bond debt. That would leave one option: a Chapter 11 filing.
There’s another reason that bankruptcy has now become all but certain in the view of most analysts: the drag of too many GM dealers competing against each other for the same shrinking pool of Chevy, Cadillac and Buick shoppers.
As expected, Chrysler LLC used its bankruptcy ask a federal judge to cut it free of almost 25 percent of its U.S. dealerships. GM is expected to detail its own plans to eliminate about 2,600 dealerships as soon as this week.
Outside bankruptcy, industry executives say GM has no chance to tear up those contracts and walk away.
The backlash has already begun and seems certain to grow bigger.
Civil rights leader Jesse Jackson used an appearance at Ford’s annual meeting to announce that he has already lined up a protest intended to call attention to the economic fallout from a GM bankruptcy.
“If GM goes down, we are going to have a demonstration the first of June in Lansing, Michigan,” he said. “We are going to have mayors and auto workers and civil rights groups and others.”
“We must warn the American people if GM goes into bankruptcy the impact will be devastating.”
Echoing a line of protest raised by the United Auto Workers, Jackson said he was worried about the loss of GM-related factory jobs and the possiblity of jobs shifting to China as imports increase.
“If they go down, whole cities and towns and state revenue budgets will go down with it,” he said.