MISSISSAUGA, Ont. – If bankruptcy is inevitable for General Motors Canada, Ottawa would prefer a “surgical” process where the troubled automaker would emerge quickly from court protection, Industry Minister Tony Clement said Monday.
“One of the options clearly on the table is a scheduled, surgical, Chapter 11, CCAA process where they go in, some changes are made, and they go out again,” he said in Mississauga, Ont.
“In order for that to even be contemplated, obviously some of our other pre-conditions have to work as well. It has to be cost-competitive, and they have to have a go-forward plan that makes sense for the marketplace of today.”
Clement stressed that the quick bankruptcy was only one of the possible outcomes and that nothing has been decided yet. However, he suggested that GM may not be able to avoid filing for bankruptcy protection.
GM CEO Fritz Henderson has made it “pretty clear” that he won’t be making scheduled debt repayments before a crucial deadline set by the U.S. government, Clement said.
A bankruptcy filing may come sooner than expected if the Canadian Auto Workers union and GM Canada fail to hammer out a new labour agreement by the end of the week.
If the two sides don’t reach a new deal by the May 15 deadline set by the Canadian governments, GM won’t get financial support and the company will be liquidated, according to CAW president Ken Lewenza.
Henderson is still holding out hope that the company can restructure without court protection, but he has said the tasks to complete are large.
Time is quickly running out for GM to work out deals with its unions and bondholders, announce factory closures, cut or sell brands and force hundreds of dealers out of business.
There are reports that the U.S. government could take a 50 per cent equity stake in GM in exchange for its loans, but Clement wouldn’t say whether the Canadian government would follow suit, as it did with Chrysler.
“I really don’t think it’s opportune to speculate on that,” he said, adding that he will be travelling to Washington next week to talk to U.S. Treasury officials about GM.
“We’re going to continue to have those discussions with GM and come up with the best way to protect the taxpayer interest, but at the same time protect one of the critical sectors of the Canadian economy – namely, the automotive sector.”
The federal and Ontario governments are investing a total of C$3.8 billion to help Chrysler survive, and will get a two per cent equity stake in the restructured company as well as a seat on its board of directors.
The U.S. government will own eight per cent of Chrysler and appoint four independent directors to its board.
GM Canada currently employs 10,300 hourly workers in southern Ontario at car and truck plants in Oshawa, a transmission plant in Windsor and an engine plant in St. Catharines. It also operates the GM-Suzuki joint-venture CAMI plant in Ingersoll.
The truck plant in Oshawa is slated for closure this spring while the Windsor transmission plant will close next year.
