MELISSA BLOCK, host:
From NPR News, this is ALL THINGS CONSIDERED. I'm Melissa Block.
MICHELE NORRIS, host:
And I'm Michele Norris.
It was a pivotal day for the survival of General Motors and Chrysler. Bondholders have rejected a deal with GM, making it all but certain the company will file for bankruptcy. If that happens, GM will be the largest industrial bankruptcy in American history. The White House says it isn't giving up on brokering a last minute agreement.
BLOCK: Meanwhile, in a New York City courtroom today, Chrysler began its fight to get out of bankruptcy. It could do so within days. Frank Langfitt covers the auto industry for NPR. He was at the court in Manhattan today and he joins us now. And Frank, we're going to get to Chrysler in a moment, but first let's talk about GM. What happened with the company and with its bondholders?
FRANK LANGFITT: Well, GM owes bondholders about $27 billion. And what GM had wanted to do, it said it would wipe out this debt and in exchange it would give 10 percent ownership share to the bondholders in a new, reorganized General Motors. Well, the deadline to do this deal was midnight last night, and most of the bondholders rejected it. They're kind of worried that this new company isn't going to be worth that much anyway. And it seems like what they want to do is take their chances in court and hope that they can get more money.
BLOCK: And would there be any way for GM to avoid bankruptcy?
LANGFITT: Well, you know, as you mentioned there, the White House is holding out a small hope. But frankly, everybody else that I talked to seems to think that bankruptcy is inevitable here. The company can't really carry this debt going forward. It doesn't have enough money. Keep in mind that General Motors lost about - I think it was $6 billion in the first three months of this year. So what they really need to do is get a bankruptcy judge to kind of wash this debt of their balance sheet.
BLOCK: Well, the Chrysler bankruptcy has gone more quickly and more smoothly than a lot of people expected. If there is to be a GM bankruptcy, would it move that fast?
LANGFITT: People don't think so. You know, this is a much bigger company. Chrysler, it's mostly in North American. GM, it's global. They make the Opel brand in Europe, they have Buicks, they make Buicks in China. And they have creditors and suppliers all around the globe. Now, a GM bankruptcy is expected to take a lot more time, would be more complicated. Yesterday, while I was here in New York, I talked with Ed Altman, he's a finance professor at New York University's Stern School of Business, a top bankruptcy expert. And he said it's hard to do a quick bankruptcy when it involves laws in other nations.
Mr. ED ALTMAN (Finance Professor, New York University's Stern School of Business): Closing factories in foreign countries is generally much more difficult than it is in the United States - it's not easy here - but it's much easier. Even in bankruptcy, it's difficult in places like Germany, in places like Brazil.
BLOCK: Frank, what's the timeline here? If GM files for bankruptcy, when would that happen?
LANGFITT: It'd be very soon. The White House pointed out again today to everybody that it gave GM a restructuring deadline of Monday, June 1. But it could be earlier. Now, of course, the idea here is to kind of, in bankruptcy court, create a new, stronger GM without all those debts. And that company, we found out yesterday, the US and Canadian government would own up to 70 percent of it. So, people on the morning business shows today, they were calling it - GM: Government Motors.
BLOCK: Well, that leads us to Chrysler now. We mentioned that you were at court today in Manhattan for the bankruptcy hearing with that carmaker. What happened today?
LANGFITT: Well, this was the most important hearing in the case. And the judge has to decide whether to approve letting Chrysler sell its best assets - like the Jeep brand, the minivans - and to form a new company - only bidder is Fiat. The sales price is about $2 billion and it would be funded by us, the US taxpayers. The owners would include the US, the Canadian governments and the United Auto Workers.
BLOCK: And is there anything standing in the way of that sale to Fiat?
LANGFITT: It doesn't seem like that much. Most of Chryslers lenders - if you remember, early on, they wanted a lot more money out of this. President Obama stood up and called them speculators and I think he even sort of suggested they were being unpatriotic. So a lot of them folded their tents and left. There are still some people objecting to it. One is a group of Chrysler dealers, they're about to lose their dealerships. Chrysler's going to end their contracts. And so they tried to slow this down this morning, but the judge turned them down. There's also a couple of pension funds up in Indiana - police and teacher's pension funds. They had bought Chrysler bonds, they're fighting this too. But you know, Chrysler, in court there, they have the United States backing them. And this bankruptcy proceeding today, it feels a little like a freight train kind of, you know, moving down the tracks. And I'm not sure we see anybody likely to derail it right now.
BLOCK: Okay. NPR's Frank Langfitt speaking with us from New York. Frank, thanks a lot.
LANGFITT: Happy to do it, Melissa. Transcript provided by NPR, Copyright NPR.
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