GM Shares Drop In Worries About Bankruptcy

NEW YORK (AP) — Shares of General Motors Corp. tumbled Monday as speculation continued on whether the struggling automaker will ultimately be forced to file for bankruptcy protection despite billions of dollars in government aid.

In morning trading, GM shares dropped 35 cents, or 17 percent, to $1.69, after falling as low as $1.66 earlier in the day. Over the past 52 weeks, GM shares have traded from $1.27 to $24.24.

Since taking the helm of the Detroit-based company last month with the departure of longtime Chief Executive Rick Wagoner, Fritz Henderson has said that GM will file for bankruptcy protection if it has to.

But the company has maintained that it prefers to reorganize outside of Chapter 11 if possible.

On Monday, The New York Times reported, citing anonymous people, that the Treasury Department has told General Motors to create a plan for a bankruptcy filing by June 1.

According to the report, the goal is to prepare for a fast bankruptcy in order to avoid permanent damage to the automaker's reputation and sales. The preparations would be a backup plan in case GM is unable to reach deals with its bondholders and the United Auto Workers union.

President Obama is still concerned about potential risk to GM's pension plan and wants to avoid harming workers, the newspaper said, citing the unnamed people.