With the deadline for GM?s restructuring plan due Tuesday US time, reports from the cash-strapped automotive giant indicate that GM will be presenting the US Congress with two costly alternatives for its future.
GM is expected to offer the US government the choice of two equally unpalatable options: either commit billions more in bailout dollars, or provide financial backing to GM as part of a bankruptcy filing that would allow the breathing room required for successful restructuring.
It will not be an easy choice. Taxpayers have already seen USD$13.4 billion in loans sent GM's way in financial aid. On other hand, GM in bankruptcy would be an enormous blow to the US economy, affecting thousands of firms and putting at risk tens of thousands of jobs.
According to experts and some members of Congress, bankruptcy may be the better option as it will allow GM to drastically cut costs, increasing the General's chances of successfully restructuring and trading out of its current dire situation.
Above: GM Chairman and CEO Rick Wagoner
If reports are correct, it is unlikely GM will have a completed restructuring plan ready by tomorrow?s deadline, as constant negotiations with unions and bond-holders have caused numerous delays. GM also claims that the lack of an appointed "Car Czar", originally intended to oversee and assist with the restructuring plans, has delayed the process further.
Once GM has submitted its plans to Congress, we may have a better idea of which direction things will head. It would appear however, that US taxpayers and Congress are tiring of the aid to America's giant automakers. What Congress may decide is uncertain. What is certain is that things are now coming to a head.