GM bankruptcy, Opel decision seen near

Wed May 27, 2009 7:43pm EDT
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By Kevin Krolicki and Madeline Chambers

DETROIT/BERLIN (Reuters) - General Motors Corp moved closer to filing the largest bankruptcy ever for a U.S. industrial company after a crucial bond exchange proposal failed and as officials in Germany neared a decision on which company would take over GM's European brand Opel.

At the same time, bankrupt U.S. automaker Chrysler faced a key court hearing expected to clear the way for Fiat SpA to take control of its best assets on the fast-track schedule set by President Barack Obama's administration.

Less than a month after it filed Chapter 11, Chrysler is seeking approval to sell its stronger operations to a "New Chrysler" owned by Fiat, labor unions and the U.S. and Canadian governments, in exchange for $2 billion paid to lenders.

The court hearing into the Chrysler sale is set to continue Thursday in New York.

With the Chrysler case nearing conclusion, attention was shifting to the complications expected from GM's bankruptcy -- expected within the next few days -- and the sale of Opel.

In the wake of the rejection, GM's board was expected to meet this week to consider the dwindling options available to the embattled automaker after a controversial attempt to restructure $27 billion in bond debt failed overnight.

The U.S. government-brokered bankruptcy for Chrysler has been seen as something of a test case for the more complex and larger filing expected from GM in the next few days.

In Europe, Fiat was also in the race to win control of Opel, part of Chief Executive Sergio Marchionne's ambitious attempt to cobble together an automotive alliance that could rank as the world's second-largest by sales.   Continued...

<p>A General Motors dealership is seen in Vienna, Virginia, May 27, 2009. REUTERS/Jim Young</p>