GM has a deadline of June 1st to convince 90 percent of its bondholders to swap $27 billion in debt for a 10 percent stake in the company. If the United Auto Workers and bondholders cannot agree to money-saving concessions by the end of the month, GM could also be forced to file for Chapter 11 bankruptcy.
“When there is a lot of bluffing going on in any negotiation, this shows the government is serious,” said Jeremy Anwyl, chief executive officer of Edmunds.com
Earlier this week GM announced an updated Viability Plan that announced the death of Pontiac, more plant and dealer closures and more job cuts in an effort to qualify for more government aid.
Currently GM and its bond holders remain far apart on an agreement to swap debt for stake in the company. GM originally offered a 10 percent stake in exchange for $27 billion in debt, but the bond holders quickly counter offered with a deal that would give them a 58 percent stake in the company.
GM’s current exchange offer expires on May 26.