GM Moves Closer to Bankruptcy as Bondholder Offer Falls Short

By JOHN KELL General Motors Corp. said it won't proceed with the repurchase any of the $27.2 billion of notes it sought, saying bondholder interest was far below the 90% threshold it was looking for. The auto maker had been seeking to swap the debt for a 10% stake in a restructured company that is on the brink of filing for bankruptcy. GM, which is surviving on government loans, has said it faces bankruptcy if less than 90% of bondholders accepted the deal, a take rate considered almost impossible to meet. GM has been looking to focus on four core brands, while closing and selling off its underperforming lines as it hopes to remake itself amid a sharp downturn in auto sales. The company could file for bankruptcy before a government-imposed Monday deadline to reorganize itself into a viable company. GM hopes to rush through bankruptcy court in as few as 30 days, but the drive for an expedited bankruptcy could be challenged by GM's investors and dealers. GM and the United Auto Workers have agreed to a new restructuring plan that would give the union a significantly smaller stake in the company than previously envisioned, and leave the U.S. government owning as much as 70% of the car maker. The government's plan also calls for paying off in full GM's secured lenders – including banks such as Citigroup Inc. and J.P. Morgan Chase & Co., which are owed about $6 billion. That would remove one potential obstacle to a speedy bankruptcy reorganization. GM shares were down 9.7% premarket at $1.30. Write to John Kell at john.kell@dowjones.com