GM insists publicly that it can reorganize before that date, but the auto company -- which was granted $13.4 billion in federal aid -- spent last week in talks with members of Obama's automotive task force discussing how to prepare for a "surgical" bankruptcy, the New York Times reported.
The preparations are meant to assure that the company is ready to file for bankruptcy if GM cannot reach an agreement with bondholders to change $28 billion in debt into equity, the paper reported.
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Fritz Henderson, GM's new chief executive who replaced Rick Wagoner in late March, said bankruptcy is probable for the ailing automaker if it cannot reach a deal with labor and bondholders by a June 1 deadline, imposed by the administration.