DETROIT - With the clock ticking on a government deadline of today to restructure, General Motors Corp. worked feverishly yesterday to shore up its global businesses to clear the way for a speedy reorganization in bankruptcy court.
GM, part of American life for more than 100 years and once the country's largest employer, was expected to file for Chapter 11 bankruptcy protection at 8 a.m. today, according to people familiar with the company's plans.
GM plans to name turnaround executive Al Koch to serve as its chief restructuring officer to help the company through bankruptcy protection, said a person familiar with the matter.
Koch, a managing director with AlixPartners LLP, is a veteran turnaround specialist who helped Kmart Corp. through its Chapter 11 reorganization. He will lead the separation of the automaker's assets into a "New GM" and the remaining parts of the company that will form "Old GM." Koch will lead the management team that winds down the "Old GM" company once the automaker emerges from bankruptcy.
A majority of the Detroit automaker's unsecured bondholders have accepted a deal viewed as crucial to reorganization, and Germany agreed to loan $2 billion to GM's German unit, Opel, as part of its acquisition by a Canadian auto-parts supplier.
The moves don't change much for GM, but better prepare it for a bankruptcy-protection filing, said Rebecca Lindland, an auto analyst for the consulting firm IHS Global Insight.
"The more agreements GM has with its interests, the better the bankruptcy is going to go," she said. "It's not a game-changer at all."
It would be the largest industrial bankruptcy in U.S. history, and the fourth-largest overall. In addition, a GM bankruptcy would be unprecedented as the federal government would pump billions more into the company, and take a 72.5 percent interest in the automaker.
On Sunday a group of large, institutional bondholders, representing 54 percent of GM bondholders, agreed to exchange their unsecured bonds for a 10 percent stake in a newly restructured company, plus warrants to purchase a greater share later. *