Apr 1, 2009 8:45 pm US/Pacific
New GM Chairman: Bankruptcy Still A 'Possibility'
WASHINGTON (AP) ―
General Motors Corp.'s interim chairman said Wednesday that a bankruptcy filing remains a "possibility" for the troubled Detroit automaker, which he said needs to work quickly with the United Auto Workers union and bondholders on cost-cutting measures.
"We've hoped we could solve our problems outside of bankruptcy because it's a much more predictable process if we could do that," interim chairman Kent Kresa said in an interview. "We have not reached all the agreements we need to with all of the participants and we need to do that very quickly or we're all going to be forced there."
Kresa, chairman emeritus of Northrop Grumman Corp., added that a bankruptcy filing is "not something I look forward to but it certainly is a possibility."
GM employs thousands of workers at its Ohio plants, including one in Lordstown that makes the fuel-efficient Cobalt.
Kresa, a GM board member since 2003, was named interim chairman of the board in a major shake up of the company engineered by the Obama administration. The White House removed chief executive Rick Wagoner and rejected the company's restructuring plan, giving it 60 days to develop a more aggressive approach.
General Motors has received $13.4 billion in federal loans and the Obama administration has said if the company fails to gain concessions from stakeholders, the bankruptcy code could be used "in a quick and surgical way" to restructure the company.
Asked about the White House's dismissal of Wagoner, Kresa said it was "their decision, not ours and we accepted it." He declined comment when asked whether he agreed with the decision.
"The board had been very positive about the steps that Rick was taking. I think the events of the last few months put the situation in a very difficult place. I think no one expected the kind of depths of the market decay that we actually saw," Kresa said.
Under the changes, new directors will make up the majority of GM's board when a new slate is nominated for election at the company's annual meeting in August. Some members had been contemplating retirement before the changes, he said.
Working with the government, Kresa said he expects to have "significant leeway" to find new directors and members of a board committee have been talking to potential candidates. The administration has not yet weighed in on the board's composition, he said.
"The government is not interested in running this process. I think the government is looking to me to ensure that we have a new board with really capable people who can bring this company through this crisis," Kresa said.
Kresa said he plans to consult with the Obama administration to "make sure they're comfortable with the new leadership."
"If they have some serious concern with an individual, I'd like to know that but I would hope that the people we'll bring on this board are absolutely the best people to be able to deal with this situation, who have had long experience with industry."
(© 2010 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)
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