General Motors bondholders felt they deserved a 58 per cent stake in the company in exchange for their billions of dollars in debt. What they were offered wasn’t even close.
The rejection virtually ensures GM will file for Chapter 11 bankruptcy protection within days.
The U.S. government, which has extended nearly $20 billion US in loans to GM, ordered the company to come up with a plan that 90 per cent of its bondholders would agree to. But the government allowed it to offer only 10 per cent of the company’s stock. GM was forced to withdraw the offer yesterday after it fell far short.
Observers have said it is likely that should GM file for bankruptcy protection in the U.S., it will not file in Canada, similar to rival Chrysler.
