If General Motors goes into bankruptcy next Monday—as is widely expected—the US government will own 70% of the automaker, the New York Times reports. Under a plan that GM officials detailed today to union members, the UAW would take a 17.5% stake though its health care fund, with a potential for 2.5% more. Bondholders, who have more money at risk than the UAW, would get just 10% of GM.
The bankruptcy is almost guaranteed despite a last-minute appeal to bondholders. They have until midnight tonight to exchange $27 billion in bonds at 41 cents to the dollar, an unlikely possibility. Should the government take a large stake in GM—which it has already loaned $19.4 billion—it would sink another $50 billion into the company and require it to keep profitable operations like Chevy and sell other manufacturing operations. (Read more President Obama stories.)