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| Version 1 | Version 2 |
|---|---|
| GM stock hit by bankruptcy report | GM stock hit by bankruptcy report |
| (about 4 hours later) | |
| US carmaker General Motors has seen its shares fall sharply after a report that the US government wants the firm to start bankruptcy proceedings by 1 June. | US carmaker General Motors has seen its shares fall sharply after a report that the US government wants the firm to start bankruptcy proceedings by 1 June. |
| The New York Times said the Treasury Department wants a court-led reorganisation, but the firm wants to reorganise without going to court. | The New York Times said the Treasury Department wants a court-led reorganisation, but the firm wants to reorganise without going to court. |
| Shares in the firm end 16% lower at $1.71 by close of trade in New York. | |
| On 30 March, the US government gave GM 60 days to develop a new restructuring plan and gain further state aid. | On 30 March, the US government gave GM 60 days to develop a new restructuring plan and gain further state aid. |
| 'Fast track' | 'Fast track' |
| The White House has already given the firm $13.4bn (£9bn) in public money to prevent it from collapsing, but any additional aid requires the firm to meet tougher rules. | The White House has already given the firm $13.4bn (£9bn) in public money to prevent it from collapsing, but any additional aid requires the firm to meet tougher rules. |
| It is not alone. Chrysler was given 30 days to submit new plans for recovery from 30 March. | It is not alone. Chrysler was given 30 days to submit new plans for recovery from 30 March. |
| US President Barack Obama, who recently ordered the resignation of GM chief Rick Wagoner, has argued that bankruptcy protection could help the restructuring process. | US President Barack Obama, who recently ordered the resignation of GM chief Rick Wagoner, has argued that bankruptcy protection could help the restructuring process. |
| According to the Wall Street Journal, the creditors may discover their rights are limited and are nervous that bankruptcy proceedings could be one step before collapse. | According to the Wall Street Journal, the creditors may discover their rights are limited and are nervous that bankruptcy proceedings could be one step before collapse. |
| "Some bondholders fear GM's fast-track reorganisation inappropriately mirrors what was done last [autumn] when Lehman Brothers filed for bankruptcy protection as the US financial system seized up," said the newspaper. | "Some bondholders fear GM's fast-track reorganisation inappropriately mirrors what was done last [autumn] when Lehman Brothers filed for bankruptcy protection as the US financial system seized up," said the newspaper. |
| Investment bank Lehman Brothers, which had been a stalwart Wall Street institution, was left to fail instead of being bailed out by the government | Investment bank Lehman Brothers, which had been a stalwart Wall Street institution, was left to fail instead of being bailed out by the government |
| Foreign rivals | Foreign rivals |
| Car firms worldwide have been hard hit by a slowdown in demand, as consumers tighten their belts faced with the current financial crisis. | Car firms worldwide have been hard hit by a slowdown in demand, as consumers tighten their belts faced with the current financial crisis. |
| In fact, the problems faced by GM pre-date the recent crisis. It and other US car firms have faced increasingly tough competition from Japanese car firms, which have developed more energy-efficient and smaller models. | In fact, the problems faced by GM pre-date the recent crisis. It and other US car firms have faced increasingly tough competition from Japanese car firms, which have developed more energy-efficient and smaller models. |
| GM and other car firms have been reducing the workforce and cutting costs in a bid to improve their balance sheets. | GM and other car firms have been reducing the workforce and cutting costs in a bid to improve their balance sheets. |
| The glum outlook for the industry was highlighted last week when ratings agency Standard & Poor's reduced certain debt ratings of GM and Chrysler Holding, in view of their uncertain outlook. | The glum outlook for the industry was highlighted last week when ratings agency Standard & Poor's reduced certain debt ratings of GM and Chrysler Holding, in view of their uncertain outlook. |