Treasury Seeks Bankruptcy Financing for GM, Chrysler

Obama administration will not rule out Chapter 11 for ailing autos
By Clay Dillow,  Newser Staff
Posted Feb 23, 2009 7:30 AM CST
Treasury Seeks Bankruptcy Financing for GM, Chrysler
In this Sept. 12, 2008 file photo, assembly line robots weld the front cab of Chrysler's new 2009 Dodge Ram pickup being assembled at the Warren Truck Plant in Warren, Mich.   (AP Photo/Carlos Osorio, file)

Treasury advisers are working to line up $40 billion in financing for General Motors and Chrysler—5 times the size of any previous bankruptcy loan—just in case the two automakers need it, the Wall Street Journal reports. While efforts continue to restructure the companies by other means, the administration is speaking to as many as 70 lenders—including Citigroup and JPMorgan, themselves recipients of bailout cash—to provide government-backstopped financing for operations during a Chapter 11 restructuring.

Part of the proposed debtor-in-possession loan would be used to pay back the $17.4 billion GM and Chrysler received last year. GM says it needs $30 billion in total aid, or $16.6 billion more than it already received. Chrysler needs $5 billion more. Both companies insist the bankruptcy option could cost the government as much as $125 billion, as Chapter 11 filings are rarely good for business.
(More auto industry stories.)

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