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GM may need to file Chapter 11
Bankruptcy might be the only option to complete the massive restructuring of General Motors Corp.'s debt as part of the federal loans approved last month to save the struggling company, a key industry analyst suggested Tuesday.

Rod Lache, the Deutsche Bank automotive analyst who set the target price for GM shares at zero, told the Society of Automotive Analysts that GM might have to consider bankruptcy given complications that arose with the rescue of GM's minority-owned financial arm, GMAC.

"The probability is greater than not that there will be bankruptcy" at GM, Lache said, "but not the kind of disruptive, scary bankruptcy with calamitous impact that a lot of suppliers are afraid of today."

Lache's remarks were made at the Society of Automotive Analysts' annual Automotive Outlook Conference, which is usually held during the Detroit auto show. This year's event was held at the Detroit Marriott Renaissance Center.

During the media days of the Detroit auto show, which ran from Sunday through Tuesday, GM executives talked about challenges of negotiating with bondholders and the UAW in time to satisfy the government.

GM CEO Rick Wagoner on Monday rated the chance of GM's surviving "very high" but "obviously it's not 100%." He also wouldn't rule out bankruptcy.

"The requirements are pretty clear," Wagoner told reporters. "The tough thing is that ... some of them are not within our control. For example, like a bond exchange, we can influence usually, but we've got to get the people who own the bonds to exchange them. So, I think under that scenario ... it's only prudent for us to be prepared for all options." Detroit Free Press

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