General Motors to file for bankruptcy

Car makers General Motors is reporting that it has fallen far short of the bondholder support it needed for its proposed debt-for-stock offer.



This virtually guarantees that the largest automaker in the Unites States will be forced to file for bankruptcy court protection within the next five days.



The bondholders were not satisfied with the prospect of owning only 10 per cent of the company when the US government would own nearly 70 per cent and a union-controlled trust fund up to 20 per cent.



The bondholders own US$27 billion in corporate notes.



GM needed owners of 90 per cent of those bonds to accept stock in return for the debt so as to reduce its interest expenses to a more manageable level.



However, GM\'s said that bondholders who took the company\'s offer were substantially less than the amount required.