Feds Put the Squeeze on Auto Creditors
Billions of dollars in concessions sought from banks, bondholders
By Rob Quinn,  Newser Staff
Posted Apr 10, 2009 6:14 AM CDT
President Obamas's auto task force has signaled a "pre-packaged" bankruptcy is likely the most viable option for General Motors.   (AP Photo/Paul Sancya)
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(Newser) – The government is pushing hard to wring billions of dollars in concessions from the creditors of General Motors and Chrysler, the Wall Street Journal reports. Insiders say Treasury has pushed GM to offer bondholders only stock in return for debt after it judged as too generous a deal involving stock, new debt, and some cash.

At Chrysler, the government is pushing creditors to settle for 15 cents on the dollar for the $7 billion they are owed—an offer called "ugly, really a pretty low starting point" by one debt holder. Senior lenders, who believe they could get up to 70 cents on the dollar if Chrysler was broken up and sold off under bankruptcy, are preparing a counteroffer.