General Motors Corp. said Wednesday its talks with bondholders to cut its debt have failed, making the Big Three carmaker's Chapter 11 bankruptcy filing imminent.
GM said it has failed to secure the consent of enough holders of GM bonds to make the debt-for-equity swap deal go through.
When the debt exchange offer expired at midnight Tuesday, the principal amount of debt notes tendered by the bondholders was "substantially less than" the amount required by GM to satisfy the debt reduction requirement imposed by the Treasury Department under their loan agreements, the biggest U.S. automaker said in a statement.
GM had aimed to persuade the bondholders to trade in $27 billion in unsecured public debt notes in exchange for a 10 percent stake in the recapitalized GM.
GM had wanted to secure consent from bondholders whose combined loans account for 90 percent of the $27 billion.
The GM board of directors will meet later this week to discuss the company's "next step" in the wake of the latest move, GM said.
GM has until next Monday to work out a viable restructuring plan or face Chapter 11 bankruptcy protection.
GM has not shown any intention to extend talks with the bondholders while keeping intact the initial conditions it set for its debt- reduction plan. This means that the carmaker's negotiations with the bondholders have effectively ended, making it hard for the company to meet the requirements set by the Treasury, which has already committed $19.4 billion in aid.
