Compliance March 24, 2006

PBGC Turns to Outside Lawyers for Advice on GM

March 24, 2006 (PLANSPONSOR.com) - The Pension Benefit Guaranty Corporation (PBGC) is seeking private legal advice to help sort through a range of possible financial scenarios involving General Motors Corp., including possible bankruptcy.
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Reuters reports that documents outlining its proposal say the PBGC would like outside lawyers to provide “advice and counsel” on:

  • the potential spinoff of GM’s financing arm, General Motors Acceptance Corp.
  • the bankruptcy of Delphi Corp., GM’s chief parts supplier
  • issues relating to GM pensions and workforce reductions
  • the prospects for a Chapter 11 bankruptcy filing or out-of-court restructuring .

“GM has suffered large losses; its credit rating has declined to well below investment grade; and there has been speculation in the press and elsewhere that the company may have to seek bankruptcy protection in the future,” the agency said in its request, according to Reuters.

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GM has said its pension liability at the end of 2005 was $10.9 billion.    The company recently announced pension restructuring plans to help it reduce costs (See GM Unveils Finalized Pension Restructuring).

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