GM may face "surgical" bankruptcy

Struggling carmaker General Motors, operating under emergency US government loans, has been told to be prepared for a "surgical" bankruptcy by June. The Treasury Department is in negotiation with the world's second biggest automaker to reach an agreement on the issue, The New York Times reported Sunday. The newspaper said that Members of President Obama's automotive task force told GM officials that they should file the bankruptcy if the company is unable to reach agreement with bondholders. GM is in talks with bondholders and the United Autoworkers Union to reach a deal to exchange around 28 billion dollars in debt into equity in the automaker. The bondholders also have reacted to the reports, saying they are preparing legal arguments against the bankruptcy plan. The new plan comes as GM officials say the company can restructure its business on its own. They insist the company's image should not be damaged. GM has been granted 13.4 billion dollars in federal aid to avoid collapse. The task force has given GM the two-month deadline to come up with a restructuring plan and to cut costs and reduce its debts in order to continue to receive aid. Two weeks ago GM former chief Rick Wagoner resigned under the pressure of the White House, after more than eight years of running the largest US automaker.