Bloomberg GM bankruptcy looms after bondholders back deal

DETROIT/BERLIN (Reuters) - General Motors Corp persuaded its major bondholders to accept a sweetened ownership plan on Thursday, a deal that could result in a smoother ride for the carmaker through bankruptcy.

But the troubles for Detroit's automakers deepened when former Ford Motor Co unit Visteon Corp and another parts supplier filed for bankruptcy protection -- a move some analysts worried could affect Ford's cash position.

Ford, the only U.S. automaker operating without emergency government support, played down the concerns.

In the biggest news of the day, GM said it had reached a debt-for-equity deal with some major bondholders that would give them a bigger stake in a reorganized automaker and could pave the way for a fast-track bankruptcy backed by the U.S. Treasury.

One senior U.S. government official suggested GM could emerge from a court-supervised restructuring in as few as two or three months. GM is widely expected to file no later than June 1, a U.S. government-imposed deadline for the automaker to prove its viability or seek court protection.

The announcement of a possible deal with bondholders was the clearest indication yet that GM, the No. 1 U.S. automaker, is close to filing for bankruptcy under the direction of the Obama administration. It would be the biggest-ever bankruptcy for a U.S. industrial company and the third-largest in U.S. history after Lehman Brothers and Worldcom.

Under the proposed deal, bondholders representing $27 billion in debt would be offered 10 percent of a reorganized GM -- the same stake they had been offered previously.

But bondholders would now also receive warrants to acquire another 15 percent of the equity in the new company, provided they support a quick Treasury-backed sale process similar to one now being used for rival Chrysler. more...