General Motors’ CEO Fritz Henderson said the manufacturer will start notifying its dealers later this week on its plan to eliminate about 2,700 dealerships by 2010.
Mr Henderson also said bankruptcy is “more probable” now given the objectives GM has set for itself, but he would not quantify the likelihood of bankruptcy saying there is “still a chance we can do it outside of bankruptcy.”
“That specific plan is being finalised here early this week, and we’ll began notifying dealers later this week,” Mr Henderson said.
GM, staying afloat on $15.4 billion in US loans so far, is grappling with a government-imposed June 1st deadline to reach agreements to restructure operations and cut more than $40 billion in total debt.
Over the last several days, GM executives increasingly have signaled the possibility of a bankruptcy filing as the automaker has made little progress in negotiating with its bondholders.
GM wants bondholders to take 10 percent of stock in the reorganised company in exchange for about $27 billion in their debt.
Representatives of GM bondholders have said they are being offered an unfairly low payout. They have asked instead for a majority stake in the restructured company.
Mr Henderson said GM was still working on a time frame for how soon a dealership would have to close if it was selected to shutter.
That wind down would include GM buying back dealership signage, special tools and dealers’ unused inventory.
GM also would honor all warranties and work with dealers to make sure customers know they will continue to be serviced by other GM stores.
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