NEW YORK (Reuters) – General Motors Corp (GM.N) will file for bankruptcy protection before financial markets open Monday morning, sources with direct knowledge of the preparations said on Sunday.
The filing will be made in U.S. Bankruptcy Court in Manhattan, the same federal court that has overseen the U.S. government-financed, fast-track bankruptcy of GM’s smaller rival Chrysler, one of the sources said.
Monday marks the June 1 deadline set by the Obama administration for GM to restructure as it coincides with a $1 billion bond payment the automaker has said it will not make.
GM has clinched a cost-saving deal with the United Auto Workers labor union and won over bondholders representing a majority of its $27 billion in bond debt in support of plans to reorganize in bankruptcy.
As part of its filing, GM will appoint corporate turnaround veteran Al Koch as chief restructuring officer in charge of liquidating the assets that will be left behind in bankruptcy, according to the source who asked not to be named because an announcement on the appointment will not be made until Monday.
President Barack Obama is expected to announce the administration’s unprecedented effort to remake GM on Monday morning. GM Chief Executive Fritz Henderson is scheduled to speak to reporters in New York at around noon on Monday.
The U.S. government plans to invest some $60 billion in GM and to sell its best assets — including the Chevy and Cadillac brands — quickly out of bankruptcy and to a company that it will finance.
Plans announced last week would give the U.S. Treasury a 72.5-percent stake in the reorganized GM, but a person involved in the process said last week that stake could be lower depending on negotiations with Canada.
The governments of Canada and Ontario are still in talks with U.S. officials and GM and will be given either equity or debt in the new GM, the first source said.