WASHINGTON AND LOS ANGELES — By offering a sweetened deal Thursday to holders of $27 billion of its bonds, General Motors Corp. and the Obama administration are trying to follow Chrysler's path to a quick exit from bankruptcy.
As GM rolls toward an expected Chapter 11 filing by Monday, a new, leaner and hopefully profitable Chrysler is preparing to emerge from its own court-supervised restructuring. It should do so only a month after filing for bankruptcy protection, thanks to some crucial agreements it locked down beforehand with its union workers and some debt holders.
GM would be the fourth-largest U.S. company ever to file for Chapter 11. Although it's much larger and more complex than Chrysler, Obama administration officials hope that carefully packing for the trip to Bankruptcy Court will speed GM's emergence.
"I don't want to suggest with GM it's going to be that surgical, that quick," said a senior Obama administration official, who requested anonymity because of the sensitive nature of the negotiations. But he suggested that a new GM shorn of most of its debt could emerge from bankruptcy protection in 60 to 90 days, much faster than most big companies.
There's a slim chance that GM won't file for Chapter 11 as the government's Monday restructuring deadline approaches. But GM's new offer to bondholders assumes a bankruptcy proceeding similar to Chrysler's, creating a new company with the automaker's good assets and leaving most of the debt behind.
Doing so would also help GM break franchise agreements with the hundreds of dealers it's trying to cut.
Coming a day after bondholders overwhelmingly rejected a deal for a small stake in GM, the new offer would give those debtors as much as 25% of the company -- provided they don't contest the bankruptcy plan.
The latest offer is backed by the U.S. Treasury and already has the likely support of about 35% of bondholders: 15% who accepted the earlier deal and 20% who agreed Thursday.
The government plans to provide GM with about $30 billion, on top of the $19.4 billion already given to the automaker, to get it through bankruptcy, the senior administration official said. Existing shareholders would largely be wiped out.
In another potential signal that GM was preparing to file for Chapter 11, the Obama administration announced that it was dispatching eight Cabinet secretaries and other officials starting Tuesday to communities throughout the Midwest that depend on the auto industry.
