GM bondholders given choice of haircut or bath

U.S. Senator Carl Levin says GM bondholders need to work with the automaker and the Auto Task Force on restructuring billions of dollars in GM debt or risk losing everything if the company goes bankrupt.

“I think the bondholders recognize what the alternatives are: It’s that they either take a haircut, or they take a bath, Levin said on Wednesday. “I hope they choose the haircut.”

A committee representing the bondholders has claimed that they are being asked to make a larger sacrifice than other players, including the United Auto Workers union, a charge that has been dismissed by Michigan legislators.

Federal officials are already working with Chrysler in its negotiations with its creditors.

There was a deadline of March 31 for Chrysler and GM to meet the requirements of the loans they have already received – requirements that included significant concessions from creditors and the UAW – and it appears there won’t be enough time to have everything completed. However, the Obama Administration has indicated it will not seek a return of the loans at that time.

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