Updated from 12:43 a.m. ESTTop General Motors ( GM) executives are more open to a speedy bankruptcy reorganization financed by the government, a published report says, pushing aside earlier concerns that such a move would scare away so many customers the company wouldn't survive. The new view represents a reversal from GM's position late last year, when it sought a federal bailout, the Wall Street Journal reports. The change in thinking, combined with the disclosure Thursday that GM's auditor has raised "substantial doubt" about the automaker's ability to keep going, appears to move GM closer to the possibility it will file for reorganization. Shares of GM were down 11 cents, or 5.9%, to $1.75 in the first half hour of trading Friday. Both developments come as President Barack Obama's auto task force is trying to decide how much more aid to provide GM. They also come as GM is locked in negotiations with its bondholders to trade debt for equity as a way to cut its cost of operations. The task force met Thursday with representatives of GM's bondholders. The panel held lengthy meetings with executives and lawyers for two important parts of the proposed turnaround plans for General Motors and Chrysler, the Associated Press reports. Those companies are surviving on $17.4 billion in government loans and seeking billions more to stay afloat. Advisers to GM bondholders met with Steve Rattner and Ron Bloom, top aides to Treasury Secretary Timothy Geithner, and other members of the panel for two hours. GM is negotiating with its bondholders to cut two-thirds of its $27 billion in unsecured debt under the terms of the loan agreement with the government.
The advisers to the bondholders declined comment. They were expected to outline several options to reduce the Detroit automaker's unsecured debt and discuss whether the government would guarantee new bonds that GM would issue as part of its restructuring, the AP reports. GM CEO told Congress and the White House in November and December that a Chapter 11 reorganization would spark a plunge in revenue from which the company wouldn't recover. But after months of research, including analysis done by top bankruptcy advisers, the Journal reports the company has come to believe it could emerge from what is known as a prepackaged bankruptcy, according to a person familiar with the matter. A GM spokesman told the Journal: "We haven't changed our view that bankruptcy is not something that we want to contemplate."