GM Default Likely, S&P Says

Standard & Poor, the people who rate the credit status of corporations, has cut GM's rating deeper into junk value because its assets are shrinking, sales are light and debt is not being reduced, according to S&P.

Although S&P predicts that a version of GM would be able to survive bankruptcy, the talk of it is becoming more frequent and more insistent, even inside GM itself.

"Should GM default or file for Chapter 11 bankruptcy protection, holders of its senior secured revolver should expect a 70 percent to 90 percent recovery of what they are owed instead of the previous expectation of 90 percent to 100 percent," S&P said in a recent Automotive News article.

The same article predicted that a Chapter 11 filing by Chrysler would likely be its death knell.

Meanwhile, if you've got a GM car or a Chrysler product with defects and it's still covered by warranty, you better get it back to your dealer for repairs while the factories are still honoring the warranties and all of this is just talk.

Burdge Law Office
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