U.S Gov expected to own 70% of restructured GM with inject $50 billion

GM had offered bondholders a 10% stake in the restructured company to reduce its $27 billion debt and avoid going into bankruptcy court. However, yesterday 90% of bondholder support refused to accept a debt-for-equity swap. Sources say that GM is now planning to file for Chapter 11 bankruptcy by June 1.

According to a report by the New York Times, the U.S. Treasury will have to inject an additional $50 billion to get GM through Chapter 11. In return, the U.S. Treasury Department will receive about 70% of the restructured GM.

Meanwhile, the UAW will get up to 20 percent through its retiree health care fund and bondholders will get the remaining share. GM shareholders will eventually be wiped out.