Chrysler's Chapter 11 opens door for GM's

0 Comments | USA TODAY, May, 2009 | by Sharon Silke Carty

DETROIT -- Chrysler's bankruptcy filing may have an unintended consequence: It could bump cross-town competitor General Motors into Chapter 11.

After the government proved it's willing to let an automaker go into bankruptcy -- and suffer the supply-chain and customer loyalty risks that go along with that -- little could stop GM from filing for court protection if it fails to slash debt and win new labor contracts.

Chrysler's filing came just hours after it failed to persuade bondholders to cut its debt from $6.9 billion to $2.25 billion. GM has to cut $27 billion in debt.

JPMorgan analyst Himanshu Patel says there's a 60% to 80% chance GM will default.

CEO Fritz Henderson told the Associated Press on Monday that GM is working hard to stay out of...