GM Says it Might Miss $1 Billion Debt Payment

Bankruptcy ‘probable’ says finance chief

Number crunchers at GM think bankruptcy may be the only way out.

General Motors is proving to be a good example of what can happen if you take on more debt than you can handle. Unfortunately for the automaker, I don’t think any amount of debt consolidation can dig this company out of the hole.

GM has a $1 billion debt payment coming up; it’s due June 1. Finance Chief Ray Young says GM might not be able to make the payment and is instead relying on a debt-for-equity exchange.

Headed for

GM will need to undergo some serious credit repair if it does default on a $1 billion payment. That $1 billion is only a small fraction of the company’s total debt, which is $28 billion.

GM spokeswoman Renee Rashid-Merem says that the company won’t be able to pay if the debt-for-equity exchange doesn’t go through or if the company goes bankrupt before the June 1 deadline.

Bankruptcy rumors

Young told reporters at a Chinese auto industry summit in Detroit that bankruptcy is “probable” for GM. The U.S. government is backing the company, and Young said that GM will get back on track “in court or out of court.”

Goldman Sachs also said today that both GM and Chrysler will likely file for bankruptcy in coming weeks. ... click here to read the rest of the article titled "GM Says it Might Miss $1 Billion Debt Payment"