DETROIT — The fate of two of Detroit’s most storied automakers — General Motors and Chrysler — is expected to be decided this week. 
It was reported early this morning that General Motors (GM) fell short of the bondholder support necessary for its proposed debt-for-stock offer, which means GM could file for bankruptcy protection in the next few days.
According to media reports, bondholders did not agree to the offer of owning only 10 percent of the company. The proposal gave bondholders a 10 percent share, while the U.S. government would own 70 percent. The remaining 20 percent would have gone into a union-controlled trust fund.
June 1 marks a major deadline for General Motors. GM owes bondholders $1 billion in interest payments, due June 1; however the automaker says it does not have the money. This is also the due date for its revised restructuring plan. GM has just five days to reach agreements with its creditors and the UAW or be forced into bankruptcy.
As for Chrysler, a bankruptcy hearing will be held today regarding the automaker’s planned merger with Fiat. According to a report from the Detroit Free Press, if approved, Chrysler LLC plans to emerge from the merger as a “slimmed down, more competitive automaker.”
With regard to Chrysler’s dealer network and the criticism the company has received over the 789 widespread dealership closures, Steven Landry, executive vice president, North American Marketing and Mopar Parts and Service – Chrysler LLC, issued a statement saying that the automotive industry cannot support the number of dealers currently in the marketplace.
"It was not an easy decision to ask the court to reject a portion of our dealer contracts, but the reality is Chrysler’s viability depends on a vibrant, profitable dealer network,” said Landry. “As presently configured, Chrysler’s dealer network does not meet that test. If the sale to Fiat is not approved by the bankruptcy court, the stark reality is all 3,181 dealers will face elimination.”
