GM lurches toward bankruptcy as bondholder offer fails

General Motors is teetering ever closer to the brink of bankruptcy today, as the automaker’s exchange offer for its outstanding debt fell “substantially” short of the necessary take-rate. GM had offered some $27.2 billion of its unsecured public notes to its bondholders, but the offer expired at noon yesterday without having the minimum tender amount met. The U.S. Treasury Department had mandated that at least 90 percent of bondholders would have to agree to swap their shares for a 10 percent stake in the GM, but far too few failed to take GM up on its offer, effectively negating any swap at all under the conditions of the tender offer.

A number of major bondholders had originally countered with an offer to give up their stocks in exchange for a markedly larger stake in the company – 58 percent – but with the lion’s share of the company already promised to the United Auto Workers’ VEBA fund and to the U.S. government, the bondholder issue was widely expected to fail.

As a result, many are expecting GM to file for Chapter 11 bankruptcy by Monday, with The Detroit News reporting that GM’s board of directors scheduled to meet earlier than that to discuss whatever options they may have left. Official GM press release

[Source: General Motors; The Detroit News | Image: Bill Pugliano/Getty] BREAKING: GM lurches toward bankruptcy as bondholder offer fails