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By Samuel R. Avro on Feb 14, 2009 with no responses

General Motors May File For Bankruptcy, Form New Company

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General Motors World Headquarters in Detroit, Michigan.

Amidst an ongoing financing struggle, and facing a Tuesday deadline to present a restructuring plan, General Motors Corp. is seriously considering filing for Chapter 11 bankruptcy and forming a new company, according to a report in today’s Wall Street Journal.

“GM will offer the government two costly alternatives: commit billions more in bailout money to fund the company’s operations, or provide financial backing as part of a bankruptcy filing, said people familiar with GM’s thinking,” the paper said.

The company is going through unprecedented financial struggles and will have to lean on the federal government for support.

Last week, GM announced plans to cut 14 percent of its workforce –10,000 jobs– as well as other measures intended to keep the company afloat.

Chrysler LLC also faces the Tuesday deadline along with GM to prove the viability of their companies in exchange for receiving $17.4 billion in federal loans.

The “plan includes a Chapter 11 filing that would assemble all of GM’s viable assets, including some U.S. brands and international operations, into a new company,” the article reads. “The undesirable assets would be liquidated or sold under protection of a bankruptcy court. Contracts with bondholders, unions, dealers and suppliers would also be reworked.”

The U.S. government has already committed $13.4 billion from its federal coffers to save the company.

According to the company website, GM employs 252,000 people in every major region of the world, and sells and services vehicles in some 140 countries.

GM is also attempting to sell its Hummer SUV and Swedish Saab brands.

General Motors declined to comment on the Wall Street Journal article, according to the newspaper.