GM threatened by bankruptcy

General Motors Corp. is getting closer and closer to bankruptcy as it waits on whether the auto industry will receive a new round of government loans. ┬á In the beginning of October, President George W. Bush gave GM, Ford Motor Co. and Chrysler LLC access to $25 billion in cheap government-backed loans to help them develop less polluting cars. Now, with GM burning through cash as US sales fall, and GM shares plunging to a 60-year low, it is speculated that the company may need extra federal funding to avoid bankruptcy. ┬á GMÔÇÖs domestic sales fell 21 percent last quarter and 45 percent in October. CEO Rick Wagoner said in an interview with Bloomberg Television on November 7 that GM ÔÇ£would be devastatedÔÇØ by a bankruptcy filing. The ÔÇ£unimaginable consequenceÔÇØ of a bankruptcy ÔÇ£motivates us to really come up with cash in every way possible,ÔÇØ he said.┬á Analysts are saying that only federal aid can prevent the nationÔÇÖs largest automaker from collapsing, and that reorganizing in court protection also may not be an option because the credit crunch has dried up financing. ┬á GM, Ford, and Chrysler have asked for $50 billion in aid to push through the worst auto market in 17 years, in addition to the $25 billion approved in September to help build more fuel-efficient vehicles. ┬á GMÔÇÖs quest for new federal aid comes at the prospect of a forced liquidation. The company said on November 7 that it may run out of operating cash as soon as yearÔÇÖs end. The automaker had $16.2 billion on hand as of September 30, down from $21 billion at the end of June, and needs $11 billion to pay its monthly bills. ┬á Mark Oline, a credit analyst with Fitch Inc. in Chicago said, ÔÇ£Strategic bankruptcy is not an option of GM. This is an issue of operating or not operating.ÔÇØ ┬á ÔÇ£A bankruptcy would not address our immediate liquidity concerns,ÔÇØ said spokeswoman for Detroit-based Gm, Renee Rashid-Merem. ÔÇ£ItÔÇÖs not an option for GM because it creates more problems than it solves.ÔÇØ ┬á President-elect Barack Obama spoke with Bush a White House meeting yesterday to discuss the urgency for an aid plan.