REPORT: General Motors in "intense" bankruptcy preparations

[cpu]

According to an unnamed source speaking with Reuters, General Motors "is in 'intense' and 'earnest' preparations for a possible bankruptcy filing." The report states that GM could be split into two separate entities; one "new" unit consisting of the General's successful brands (read: Chevrolet and Cadillac) and an "old" unit made up of its less-profitable endeavors (Hummer, Saab, Pontiac and Saturn).

If the plan is enacted, the all-new GM would assume some of the debt from the bankruptcy (primarily, unsecured debt) and that GM's bondholders would lose a substantial amount of value if the Chapter 11 filings go through. Naturally, neither source wished to be named, so this is all conjecture at this point, but if GM does declare CH11 within the next month-and-half, expect the Feds to step in to avoid the cataclysmic effect on both suppliers and the economy as a whole.

[Source: Reuters]