GM bankruptcy ‘within days’

THE US government is preparing to send General Motors into bankruptcy as early as next week under a plan that would give the automaker tens of billions of dollars more in public financing, according to the Washington Post.

Quoting sources familiar with discussions between the Obama administration and GM, the Post says GM would get “just short of $30 billion” ($A38.4 billion) in additional extra loans as it battles to survive.

A cash injection that large would boost the US government's investment in GM to nearly $45 billion ($A57.6 billion), the article said.

And that figure is just the starting point in negotiations between the government and the company, the source is reported to have told the Post. GM executives in the US have indicated that Chapter 11 bankruptcy is now likely by June 1 – a sentiment echoed by GM Holden chairman and managing director Mark Reuss when talking with journalists at the Holden Cruze launch this week.

The US government has said it plans to take at least 50 per cent of the restructured company and will likely assume the right to name GM directors, the Post said.

Meanwhile, the United Auto Workers union says it has reached a tentative new contract with GM and the US treasury aimed at helping the auto-maker restructure.

The terms include reworking $20 billion ($A25 billion) in debt owed to a UAW-administered retiree health care trust known as a Voluntary Employees' Beneficiary Association, or VEBA, the union said in a statement today.

In Europe, Fiat has formally announced its bid for GM Europe’s Opel and Vauxhall, joining what is believed to be three-way battle.

Parts manufacturer and vehicle assembler Magna International and Belgium investment firm RHJ International are believed to be other interested parties discussing a takeover of GM’s European operations.

Fiat CEO Sergio Marchionne travelled to Germany earlier this week to discuss the Fiat bid with the German government which is likely to have a strong sale in the new ownership of GM Europe, as government aid is almost certainly going to be demanded.

The German government had asked for all bidders to submit their proposals to Berlin by Wednesday.

Read more:

GM bankruptcy could spread overseas

GM, Chrysler ask for $61b in US survival aid

GM Holden should be safe, says Reuss